- Personal Finance
How To Make The Most Of Your Credit Card
Credit cards are awesome.
yes, you read that right. I think they really are a boon. No hassles, no fear of carrying cash around, emergency funds, insurance, and much much more.
This hub will help you make the most of you credit card. Here are some Ideas:
pay before due date
Most banks give you a "free" credit period. This is typically 50 days.
That means whatever you spend from the billing cycle date is completely interest free till your due date.
That is awesome! In tight months and economy, a free period of 50 days is a lot.
How do you keep making the most of this?
Only if you pay up all your dues by the due date. No outstanding. Leave something outstanding on your card and you start having to pay from the moment you spend.
so rule 1 | use card only if you know you will be able to pay up by the due date.
get revolving credit
Get bank (HDFC) just sent me a note saying that as a special offer I can avail of a revolving credit 0.99% instead of the regular 2.45% I pay.
I dont really pay coz as my rule 1 tells you, I dont keep outstanding. But if you have to, then ask your bank for this.
They also gave me a very sweet deal on EMI (equated monthly income).
I can buy anything above INR 5000 and convert it into interest free EMIs.
Co-Branded cards are when a company (say oil-marketing, or consumer or clothing store) teams up with a bank to offer a special card for people who spend there a lot.
I love these cards. They give me special offers, take special care of me (in some places, automatic upgrades, free drinks, extra discounts and separate area for billing).
If there is a product/ service/ company that you use often, I would advice you to get a co-branded card and start using that.
You get points too!
use each card for something in particular - use statements for financial record keeping
I read this somewhere and realized it was such a wonderful way to use credit cards.
I now use one card for my fuel needs, one for entertainment, one for home groceries and when the statement comes in every month, it automatically becomes my financial record keeping for my accountant.
set limits / set alerts
This is critical for me.
The bank does it too. try swiping your card in one go for your entire credit limit and you will get a call from the bank.
But I also tell the bank that I want limits on my card. So if my petrol bills for a month cross a certain amount, I get an automated alert.
I also use limits for my add on cards, so that there is no inadvertent spend.
use special promo codes
On almost all e-commerce sites you will see a box "PROMO CODE" at the time of billing.
this is a super sweetener ( sometimes I get stuff for free!)
Check out your credit card bank's website for special offers.
Note the promo code and be sure to use it.
get free add-on cards
All my add on cards are free!
They give my family an additional security for any emergencies etc.
Use these extensively.
the out-right and most common thing is to use points for freebies or miles or upgrades.
But look for other things.
special lounges, invites, passes to events, happenings, etc.
You also get better deals on new loans based on your credit history and report.
cash back programs
This is the kicker!
every month my bank sends me an update communique on all the spends they are paying me back in cash, yes cash.
So if I buy an airline ticket, they re-imburse in cash.
Why do they do this? higher spends, higher chances of you rolling over your outstanding. also merchant fees, loyalty etc.
What is important is here is someone paying you for something you were anyways going to spend on. I have to travel. I just make sure I travel on the airline the bank is paying me to!