7 tips to make the most off your credit card

photo by The Consumerist

A credit card can be an excellent tool for saving money and getting discounts. If one goes haywire it can lead to additional costs and penalties. Credits cards are often blamed for debt woes as well as other consumer-related ills prevalent in society. But, in reality, most of such woes result from the misuse of plastic money or the ignorance of consumer himself rather than keeping a credit card in your wallet. Here are some tips to make the most of your credit card:

Use your cards smartly

These days some credit cards offer discounts in tie-up with lots of commercial establishments, where getting 20-30 per cent discounts (even more) is an usual affair. Besides, credit card purchases are usually paid after a lag of one month. You, thus, save interest cost of around one month when you use credit cards. Moreover, credit card spending sometimes earns reward points which may be redeemed at any point of time in return for useful articles.

Got Virtual Card? Use it

Banks such as HDFC, Kotak Mahindra and Axis offer a virtual card which can be used for online shopping. You have to fill some personal details along with the card number on the bank’s home page and you will be given a card number along with the CVV number for a one-time use. You have to key in these details, which is exclusive to that transaction. In a virtual card, you should also specify the transaction amount. So the virtual card will be loaded with the required credit limit. You can pay for this virtual card either through your credit/debit card.

Know the features of your card

For instance, if your card (e.g. Gasoline Credit Cards) offers reward points on buying fuel through it, it is no use paying cash at petrol filling stations. Instead use your card as much as possible, accumulate reward points and get free fuel after some time. But remember to clear the total card dues in time, otherwise you will end up paying more for the same fuel.

Cash back rewards

Some credit cards these days offer cash back rewards (usually 3 to 5 per cent) on your spends. But you could do better if you could find a card that will deduct the cash back right off the credit card statement or find one with a higher cash back.

One such card that offers a higher cash back is Kotak Trump Gold Credit Card. You get a 10% cash back on movie tickets, plays, food and drinks at coffee shops, fast food joints, restaurants, pubs & bars all through the year. 2.5% Fuel Surcharge Waiver across ALL fuel pumps. Zero charge EMI. Railway surcharge waiver for offline (2.5%) & online (1.8%) transactions. A max of Rs. 800 is the limit of cash back you could receive in month, so you can save upto Rs. 9600 in a year. Calculate your annual savings here.

Also, cash back credit cards are useful only if you have high money turnover. If you don’t buy much, you would loose on APR. Because rewards credit cards have higher APR (annual percentage rate) than other credit cards. Besides, the cash back game makes sense if you pay your credit card bills in full and on time each month. You should also be aware of the fact that to get cash back rewards, your card has usually to be swiped on the issuer’s machine itself. Otherwise you won’t get any reward.

Leverage your credit history

If your credit history is good, that can also be leveraged while negotiating loans with banks. You can get a cheaper loan from the credit card issuing bank itself or some other bank. Sometimes only your credit history is enough for getting a loan of your choice.

Fraudulent transactions

Nine times out of 10, retailers accept credit card payments without a second glance at the signature. Given the long queues at the billing counters, many merchants overlook signature verification despite the gravity of this issue.

However, the liability always lies with the merchant if he processes a fraudulent transaction. Hence, always keep a photocopy of your credit card (along with the signature) to help you in case of disputed transactions which has to be reported within 60 days. If the signature on the charge slip mismatches with yours then the merchant has to bear the liability and you get your money back. Most card issuers have dispute forms either online or in their branches.

The most important — Always pay in full and pay in time

But all said and done, you should never delay the credit card payments or make part payments. Plastic money rewards are useful only if you pay off your card in full every month. Simply because the interest charges from a single month of spending can easily wipe out the benefits of any rewards you earn!

Remember when you rollover, you get no free credit period. Just stop the use of card in that case. Thus, as with other debt tools, credit cards just need to be managed effectively and used smartly, and no one can stop you from emerging a winner in this game.

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Author: Austin Comments: 4 comments Date: 27 Sep 2008
Categories: Credit Cards Tags: , , , , ,

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