Finance-Creditcards

Few years ago I got my first Stand chart Credit card. Those days I haven’t realized the power of the plastic money.I use the card once in a while to purchase petrol ,Groceries and would happy paying the minimum dues.I haven’t realized that this is going to lead me to trouble.Without realizing the plastic money as a credit assuming that some one offering free money and more easily available it made more tendent to spend the money and increase my liability. I have been paying the minimum due regularly for many months..

But over a period of time I realized whatever the additional purchase I am making along with the old due they are charging the interest and my over due have never come down it was flat and I was paying only the intrest.It seldom continued for over 5 years .At a particular point of time a close buddy pointed out ..Then I really need to evaluate my self what I have been doing what I have to do..I have noticed I don’t have any control on the money which was outstanding was huge around 75k…Then I realized I need to do a sacrifice some amount of saving because if I allow this it will eat all of my savings one day…

I have to break some of my FD which I considered as saving and closed and came out of the credit rut…

But a few learnings

1)If we have a credit card need to use only we have visibility of funds flow for every purchase. Before buying a washing m/c if I have the visibility of funds to pay the money like processing the pending LTA or the expected pay from Variable pay or bonuses etc. Such planning will make you use the credit limits very wisely and your idle cash of 25k for 45 days will yield you some lowest interest also.


2)Never be tempted to use the money or the money which you have allocated to pay the credit card bill. Even if it is a lac of rupee it is not your money it is Banker’s money. There is a tendency many times for me it so happened when I made a purchase more than a Lac..I have more bank balance ie more than a Lac But I had a hesitation to pull that money for paying the credit card bills. That temptation should be avoided.


3)In addition if you purchase through credit cards the credit card companies may offer some promotional purchase like Cash back etc.You can get the real benefit when you maintain the credit with the strictest control and pay it on time.

4)You can get the benefits of reward points as good us getting some money back. Earlier credit card companies are offering 1 reward point for every 100Rs you spend. Now the major credit card companies are offering 1 reward point for every 200Rs Purchase.Neverthless, you wont be getting any benefits by spending your hard cash and also carry some risk for carrying your cash. Any way though I have spend so much amount of money by paying intrest .Now I am really getting the benefits of cash back and reward points and gifts etc.If I value that it will cross more than 20k.


5)If you are a moderate purchaser you could able to reap reward points of around 500-600points as good as 600Rs.


6)Need to have a control on your spend inline with your income flow first then you will have control on the credit cards as well.


7)If you are a prompt paymaster you never know the credit card companies beckons you to offer loans with the modest interest rates whereas it is not an easy for others. They will send several mailers to you to take loan without any salary slip or form 16 etc.. You will never know you have got a credit rating which bank has valued and ready to associate with you.


8)Your good track record will always be a record in CIBL(Credit information Bureau)and shared across the banks.


9)In today’s fast moving world emergency is uncertain for any body and need of money is so important .It is a kind of relationship you are building with a bank unknowingly but you will realise when you dial and ask for money in such circumstances. Even your closest friend may not help but the credit card associated banks can help in the form of a loan.

It would always be good to use cash and use our own money policy. It would give some pride and always portrays a self dependable rather than anyone. But the usage of credit card is an opportunity to show our credibility and credit worthiness with the credit companies and the banks we associated with and reaping benefit to us.


Warm Regards,

Mike.