Credit card experiences - tips and tricks

How many credit cards should YOU own?  This rediff write-up prompted to look at my own experience.

I got a credit card the same year that I started working.  That was a Visa card from the same Bank that I had my salary account.  Those were the days before debit cards were popular.  There were ATM cards which could not be used for credit purchases. Citibank had come up with a Suvidha account with a card, which was probably one of the earliest such card.

I used the Bank's Credit Card drop box in their ATM or other drop box facility to make the payments before the due date.  I always paid the entire amount being very particular not to be charged late-payment fee or interest on outstanding balance.

After a few months, I did a standing instruction with the Bank so that on the due date, the due amount got debited from my Bank account.  I no longer needed to track the payment date.  Of course, I diligently went through the Credit card statements. I even preserved the charge-slip so that I could cross check if required.

This was a Visa card. It had a rewards system which gave me points on purchase.  I redeemed it occasionally when the points were sufficient and/or I found an interesting item which I could redeem with the points I had.

I used to use it online - in those days, there were no "Verified by Visa" or "Mastercard Securecode".

Very soon, I got an Add-on card for my mom so that she could do cashless transactions where possible.  Again, in those days, credit cards were much less popular in my home town Cochin, compared to Bangalore.  I recall a couple of incidents in hotels, where they refused to take cards.

After marriage, I got another Add-on card - this time for my wife.

The issuing Bank used to increase my credit limit or change the type of my card each time it came up for renewal.  On my own, I never felt a need to increase the credit limit.

My credit card had an annual fee and each year, I used to call the Bank, when the fee was levied - either for the primary or the add-on cards.  I ended up convincing the Bank staff to waive my Annual fee citing my relationship with the Bank, credit-worthiness as well as the usage.

Initially the cards were only usable in India.  Very soon they became international.

It was after I changed companies and my salary account got changed as well that I ended up getting a second card. I was careful to choose a Mastercard this time. I was also fortunate to be offered a Life-time free credit card - no more the need to call the Bank to reverse annual fee.

In fact, I ended up paying a one-time fee of Rs.99/- to convert my first credit card, along with its add-ons to a "life-time free" one.

I enabled the auto-payment option for my second card as well to avoid the need to manually keeping track of payment dates.

So how to get the best out of the credit cards?

1. The best date to use the card

The best date to use the card is the billing date. Why?  Credit card bills are generated each month on a specified billing date.  Usually about 20-25 days are given after the billing date for payment.  By using the card on the billing date, the bill for that transaction will come only in the next month's billing date and that needs to be paid only 20-25 days thereafter - for a total of 50-55 days credit.

For example, if the billing date is 2nd of each month.  A card transaction made on 2nd June will come in 2nd July's bill and will need to be paid by 25th July.

Now how does having two cards help?   Each card will have a different bill date.  The bill date for one of my card is 2nd and the other is 22nd.  To maximise the credit period for my transactions, I use the card whose bill date is 2nd from 2nd to 22nd of each month and the other card from 22nd to the following 2nd.

Of course, the volume of my transactions do not bring me any tangible financial benefit, but it feels good psychologically. Also, this way, I get to use both cards in a consistent way.

2. Surcharges and other charges

Credit cards attract additional charges when used in many Government transactions.  For example, Railway ticket booking or petrol purchase.

My credit cards waive the petrol surcharge if the transaction is more than Rs.500/-  It is good to know this and use it suitably to avoid additional charge.

3. Rewards points and benefits

It is good to know the reward schemes offered by the card as well as go through the catalogue.  It is also important to know the expiry of reward points so that they can be redeemed suitably.

4. Cards and traceability

The most important reason for me to use card is not the credit benefit, but the traceability of transaction.  Cash transactions are hard to remember, but a credit transaction leaves a documented trail.

You can also pay in one shot, instead of withdrawing cash once in a while.

5. Cashback

I thought two cards were more than enough, when I came across Cashback cards.  These cards apparently give you cash back for making transactions - would you believe it?

I resisted myself from exploring these.  Finally I fell into the lure of a telemarketer and ended up getting my third credit card - a cashback card - free for the first year.  I do not propose to use it if I have to pay an annual fee - so possibly I will not have it next year onwards.

Anyway, I like this card - I get a 5% cashback for transactions in grocery shops or some supermarkets for amounts > Rs.500/-  Considering that I do full on-time payment, I wonder why on earth would credit card companies be interested in a person like me!


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