Credit Cards....... Are they really that bad....??

Since the last week I was searching for a topic to enter this wonderful world of blogging. But then, destiny had something in its mind already. The other day, I was with a friend shopping in a mall. After contemplating for a long time on what to buy and what not to, we finally decided on some clothes for us and joined the queue of payment. (I think mall is the only place where people form a queue to pay someone. J ) While paying for my stuff, the cashier asked me whether I would like to pay cash or through a credit card. I opted for credit card and this somewhat disturbed my friend. On our journey back home, he started convincing me about how my decision of mode of payment was wrong. But then, I was not ready to accept and in the end, I convinced him that credit cards are a boon to us, if used intelligently. Then it struck me that this was the apt topic to start my blogging as these days, we get atleast one call everyday from a bank offering a credit card. Here are some of the arguments which I put forward to him.

But, first of all, some instructions:

1) The credit card should be free for lifetime and no monthly or annual fees.

2) Never withdraw cash from an ATM using a credit card. This will burn your pockets later as the interest starts from day 1. There are some hidden service charges, too.

3) Swipe your credit card the whole month but pay the outstanding before the due date. Do not spend more than what you can afford. So, while spending, ensure that you will be able to pay the sum before the due date.

Here are some of the intelligent ways of using a credit card:

1) All the credit cards claim of giving 50-54 days of interest-free credit. It is true but there is a hidden clause in it. The 50-54 days are maximum days for which you get the interest-free credit. This is elaborated further. Now, on a particular date of every month, say 10th, a monthly statement is generated. After this statement gets generated, the outstanding amount has to be paid within 22 days. So, if you swipe your credit card on 11th of some month, say January, then it will be included in the statement generated on 10th February. This amount has to be paid by 10th February + 22 days = 4th March. Hence you get a credit for 30+22=52 days. But, if you swipe your credit card on 9th January, then it will get included in the statement generated on 10th January and you have to pay the outstanding by 1st February, i.e. net credit period = 22 days. The moral of the story is that, postpone your shopping to the next day of the statement generation date so that you get maximum interest-free period.

2) Every credit card has a Reward Programme in which you earn one point for every Rs 100 spent. So, it makes sense to use a credit card instead of paying cash as every transaction will help ameliorate your points. These points can be further redeemed for gifts and vouchers. (I had redeemed the points for vouchers worth Rs 500 without spending a single penny.)

3) Using internet banking, most of the bills (Electricity, Gas, Mobile, Landline, etc.) can be paid through a credit card. (I pay all my bills at one click sitting at my home at any time of the day.)

4) Imagine that you have two credit cards of two different banks and you fail to pay your outstanding of one card and the due date is approaching. Sounds scary? Don’t worry. The facility of balance transfer comes to our rescue. If you have two credit cards, you can transfer the balance of one card on another and pay it in three parts in three months interest-free. (A nominal charge of Rs 100 has to be paid to avail this facility. But it is always better than paying the interest and other charges which are to be paid if you fail to pay by the due date.)

Hope you all agree with my argument. Happy swiping!!!