Thursday, 5 July 2018

Tips To Maximize Savings & Earnings From Your Credit Cards

India unlike the west, is a country which transacts mainly in cash. The demonetization move announced by the Indian PM - Narendra Modi in Nov'16 has led to a behavioral change in the Indian consumer. Increasing number of Indians are now transacting via plastic money ie debit, cards, credit cards & mobile wallets.

While the average Indian is sceptical of using credit cards as many have heard of Americans raking up huge credit card debts. Credit cards do come with huge credit limits & this feature often leads to people overspending. It is common knowledge that credit card interest is as high as 36% as against 12% on personal loans. Credit card companies are known to target habitual defaulters by offering them a credit card for free & charging exorbitant interest rates later on. This has led to many Americans going bankrupt!

But credit card can be a huge boon for people who can keep their spending under check. The trick is to not spend beyond the sum which you can't pay off within one month. Never let your credit card dues roll over! Take a personal loan or sell your assets even if required, but never keep your credit card dues pending.   

We list out the benefits of having a credit card in your wallet & how can you can utilize it to the maximum

Type Of Credit Cards

A lot depends on the type of credit card that you own. Based on your spends & spending patterns you can opt for a card of your choice. Credit cards generally fall into the following categories

1) Rewards Card - Rewards credit cards offer you rewards against every spend. The rewards can then be utilized in exchange for holidays, air miles, merchandise & cash back.  & are offered to even those with not a high income. It is a favorite among newly employed professionals. It does come handy for people who shop for grocery, watching movies, eating out etc. Our experience with the Standard Chartered Bank - Manhattan Platinum Rewards was a highly "rewarding" one.

2) Shopping - Credit cards companies have been tying up with large retail chains for co-branded cards. This is beneficial for all parties involved. We were fans of Shoppers Stop - Citibank credit card. The catch is that you can avail maximum benefits only if you shop at the retail chain in question. But thanks to a shoppers stop outlet being close to our home, we could utilize the benefits to the maximum. Shopping credit cards are a huge hit among people who splurge a lot on clothes, accessories etc.

3) Fuel rewards Card - All your fuel spends can get you reward points thanks to credit card companies who have tied up with oil marketing companies. This is a boon for automobile owners who are hard pressed for money owing to the sudden surge in fuel prices. Every INR 100 spent on fuel leads to 1 reward point. Every reward point is worth a rupee. If your fuel expenses are a cause for worry, we recommend you to apply for a fuel card ASAP. The Citibank Indian Oil credit card & ICICI HPCL credit cards are the best credit cards in this category.

4) Air Miles Card: The Air Miles Card is probably the most prestigious credit card type to own. Most air miles cards require you to pay a joining fee in the range of INR 3000 -5000. But the benefits are to die for. Air miles cards give access to premium lounges for literally no charge. We have treated ourselves to quality alcohol, food, soft drinks at the lounges across the country & abroad. All lounges boast of charging points, wifi & are replete with comfy couches. One must not forget that all your money spent on travelling can get you air miles. The air miles earned can be exchanged for a free ticket for your next vacation. The money spent as joining or annual fees will be truly money well spent.

1. Joining/Annual Fees Waiver: If your credit cards spends exceed a certain amount, credit card companies will happily waive off your annual fees. If you apply for a new credit card from the same credit card company which has already provided you with a credit card, you can request them to have a lot at your spends on the other credit card & ask them to waive off the joining fees on your new credit cards. They may ask you to pay for the fees in the current month, but the fees will be credit back to you in the next billing cycle. Standard Chartered has been very accommodating in this regard.

2. Signing Up For Offers: Do remember to check your mails for various offers mailed by your credit card company. Credit card companies especially American Express mails offers, which require you to sign up via clicking on a link.

3. Supplementary Card: Opting for a supplementary card is hugely beneficial. American Express offers good incentives to people who opt for a supplementary card. Besides the incentives, the ease of  transaction & benefits of your credit card can be enjoyed by your loved ones too. All their spends will earn you rewards points.

4. Payment Wallets: One smart way for earning cash back through your payment wallet as well as reward points through your credit card is recharging your wallet through your credit card. The money you spend recharging your wallet will give your reward points on your credit card & the payment wallet will give you cashback for spends on utilities, online shopping, money transfer etc.

Standard Chartered & Citibank are by far the best credit card companies. While American Express cards are prestigious thanks to their marketing, their rewards don't match up to their high annual fees. We found  that the rewards accrued from Standard Charted or Citibank were far superior than the rewards  accrued from American Express credit cards. It is safe to say that Standard Chartered & Citibank credit cards offer better bang for your buck.


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