Sunday, May 3, 2009


We all know that credit card can be good and bad both,depending on the way we use it. There are ways in which we can use it effectively for our benefit. It is infact not such a bad thing to own ,if only, we use it with diligence and financial discipline.While credit cards penalise people for revolving money by levying huge interest charge, it also offers some unique benefits to its users. As a user of credit card ,you can take advantage of these benefits while still staying away from all its evils. And here I am not talking about benefits like lifetime free card or no annual fee on add on card etc. While these are no dobt benefits for a user, they are basically hygiene factors which are desired by a user but do not really motivate a smart user to own one.And as such you must always look to own a credit card ONLY if it offers these hygiene benefits. Now after you have a card you must use it wisely in orer to get some really unique benefits. Some of the major benefits out of using credit cards wisely are as under:
1. Interest Free money for upto a month - Credit cards offer "interest free credit period" to all its users which varies from a 20 to 50 days depending on the billing cycle and date of purchase.The only condition here is that the user should not have any outstanding balance on the card before the purchase is made i.e. the card dues have to be fully paid. So if you pay off your dues fully on or before due date,always , you can enjoy interest free credit for upto a month on your card. This is the only product which offers you this facility with such unmatched ease.
2.No interest charge - I abhor credit cards for the huge interest rates they charge. But there is a way in which we can use the credit card without paying even a penny to the card company as interest. For that to happen we will have to be spot on with our payments.If we pay off all our dues on the card, always before our interest free credit period expires , we wont have to pay any money towards interest to the company. This way we can have the convenience of using plastic money without really paying for it.
3. Free Reward Points - Almost all the credit cards offer reward points on your purchases to encourage you to shop more on your card. This is basically done by the card company in the hope that you will revolve the money on the card because of extra purchase ,thereby paying interest on it. And since the interest in so high, they will make money in the end even after accounting for reward points. But, if you are not the one who revolves money and does not shop for things which are not necessary ,then you can benefit a great deal from these reward points. These reward points can be redeemed for cash or gifts. Thus, just by shopping for your routine necessities on your card,you can earn extra cash or gifts from the card company. Where else will you get paid for buying your own routine necessities.A good deal.
4. No charges/fee at petrol pump - A large majority of the credit card users use their cards at petrol pump filling stations because of the convenience it provides. While most of the cards charge a transaction fee on every transaction done on your card at petrol pumps,there are few co-branded credit cards which don't charge any transaction fee. Some examples of these cards are Citibank IOC credit card,ICICI HPCL credit Card, SBI-IOC credit card. So you can have the convenience of using these cards at petrol pumps,earn reward points on them without paying any interest and transaction fee on them. Isn't this cool.
5.Ability to transact on Internet- These days more and more services are getting available on net. For example right from train ticket reservation to air ticket booking to movie tickets etc,all are available on net.But you will require a credit or debit card to use these facilities on net. Once again ,smart use of your credit card will allow you to use all these services which you may not have been able to use in the absence of a card.
6.Benefit from various promotional offers - Credit card run a whole host of promotional programs to induce users to use their cards. Promotional offers like cash back facility,air miles for air travel,extra discounts on shopping on your card at select stores offer genuine benefit to its users.You can benefit from these schemes while shopping for your regular stuff.
The key to all this is that you must not look to shop for the sake of benefits because thats precisely the trap the credit card companies lay for you.They hope to entice you with these benefits into shopping for unnecessary things or needs. You must shop only if you have to and then take these benefits as add ons.

1 comment:

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