| Credit Cards.. Hmm.... Many of us are always in Delusion whether to use them or not. Can i handle it. I can't understand this billing Cycle fundamentals. I can't carry them. There are so many charges etc. etc. etc. So i'll explain with some Comparisons of Credit cards i use and how i have been benefited from them. |
Credit Cards: What are they?
In simple terms, its a way , in which a bank is giving you money to spend. So when you get a credit card from a bank or some financial institution (with some limit, lets say: Rs: 50K), it means you can purchase anything from a place which accept payments via credit cards and you don't have to pay anything because its banks money and they are paying for your expenses.(Not for long time though).
The Funda is very nice and catchy but it tends to put many in debt because with good credit card limit in pocket, we feel like buying everything and when we fail to pay back in time , we are required to pay a huge interest rate , which keeps growing if we don't pay on time and so we have to be cautious about our own limit of spending.
Billing Cycle: Its a time period, free of interest rate which banks gives you to pay them back. Your billing cycle won't start until you make your first purchase (Almost all banks follow this system) and so it will be different for everyone. It goes something like this: You got a credit card in the Month of January. You made your first purchase on 5th of January and so company(did some internal calculations) and make a billing cycle from 2nd of every month , which means on that day a bill will be gnerated which will calculate the total amount you have spent till that day.
So in this case:
1st Purchase: 5th Jan and lets assume there are 2 more purchases on 15th jan and 1st Feb.
So on second of Feb , a bill consisting of above purchases will be calculated and will be mailed to you.
After bill gets generated, bank gives you another odd 20-21 days to pay them , so you have to pay them back by around 26th or 27th Feb.
And so in total, starting from 5th Jan to 26th feb, you have around 52 days to pay them back without any interest fee. So technically, you have maximum of 52 days. You don't have 52 days period for all purchases. So, for above case its like this:
| Purchase | Max Days to Pay Back |
|---|---|
| 5th Jan | 52 |
| 15th Jan | 42 |
| 1st Feb | 25 |
Now lets look at 3-4 different cards which we can get benefited from for our daily stuff.
| For Movie Freaks and Diners: Kotak Trump Card: |
| 1.10% cashback on Dining and Movies in a billing cycle. |
| 2. Fuel Surcharge waiver. |
| 3.You need to have a minimum bill of 5K in a billing cycle to be eligiblefor10% cashback scheme. |
| 4. Joining Fees of Rs. 500 (Can be recovered easily within a month with cashback. |
| 5. Your total spending at a dining should be 4K max. So if you have a bill say7K, pay only 4K using thiscard and rest 3K in cash or other card, if you want 10% (Rs 400 here) back. Not a bad deal. |
Citibank Indian Oil Card: Get Petrol from Points:
Another very good card, where they give you some points when you buy something using this card. And after some point get accumulated you are getting an option to redeem them with petrol at Indian Oil Petrol pump. You can get the details from their site that how much spending will get you how many points , but things to take care for :
1. Its for Indian Oil Petrol Pumps only.
2. They should have Citibank EDC Machine to swipe your card because then only you will be able to redeem the points and also the fuel surcharge waiver will be given.(surcharge is some tax which is charged when you make payment using a credit card).
3. Check the below link to see the places which have that machine at their petrol pump outlets: http://www.online.citibank.co.in/portal/newgen/cards/tab/cc_pdf/IOC_outlets.pdf
Standard Chartered, Manhattan card: 5% cash back on Supermarkets:
This card gives you good option of getting a cash back of around 5% when you purchase form supermarkets like Big Bazaar, Dmart,Reliance mart etc. So apart from the store discounts, you can get extra cashback which is really good one. You can save around Rs: 400-500 Per Month.
So, if you can manage your cards properly and use them judiciously, you can make good savings out of them and can reap good benefits. I have mentioned the cards which i am using and the benefits i am getting from them. You can check for other cards and can have them as per your priority. Don't have too many cards as they'll be difficult to manage. Make a list of your type of spendings in a month and get a card according to that.
Hope it helps.
