How to use Credit Card Wisely

[princeoo7]

Well I am new to the world of Credit Cards and know very little on the matter, so lets discuss on the same here
Thinks I know:

1) Use 30% of the credit limit to be on good side of CIBIL Score.
2) High amount purchase can be converted to EMI's.
3) We get discount on purchase events in amazon, reliance digital store, flipkart
4) Never Ever remove cash from ATM using Credit Card.
5) Pay full amount within 50 days period. partial payment will get interest rate attached from day one.


Now I know a the above be below is what I want to know:
1) Can I purchase good's exceeding the Credit Card limit when I have cash in account and can pay directly but instead of debit card want to have this transaction on credit card as it gives reward points and we can have the spending quota fulfilled as well side by side.
2) What would be a safe amount to be allowed for contact less payment method.
3) Does Shopping Groceries with Credit Card should be done in local market or malls ? if yes then is the amount deducted from the account and not the limit, right ?
4) If you want to have a certain credit card and don't want to use the current one from the same bank should you close the current one and ask the new card or get the new card first and then close the current one.

Other People can hijack the threads if they have any queries on the same

 

[nRiTeCh]

Now I know a the above be below is what I want to know:
1) Can I purchase good's exceeding the Credit Card limit when I have cash in account and can pay directly but instead of debit card want to have this transaction on credit card as it gives reward points and we can have the spending quota fulfilled as well side by side.
2) What would be a safe amount to be allowed for contact less payment method.
3) Does Shopping Groceries with Credit Card should be done in local market or malls ? if yes then is the amount deducted from the account and not the limit, right ?
4) If you want to have a certain credit card and don't want to use the current one from the same bank should you close the current one and ask the new card or get the new card first and then close the current one.

Other People can hijack the threads if they have any queries on the same

1- Yes but not recommended as it might spoil your cibil. I have done on my Yes bank cc where unfortunately on that day I was only carrying that single credit card and shopped exceeded the credit limit. I did informed the bank the next day and they put some charge on that transaction and later increased the limit.
2- I have made it to 1.5k only and disabled on most of the cards.
3- Didn't get you... credit card has its own separate account aka credit limitso it shopping amount gets deducted from it.
4- You can have as many cards from same bank and not necessarily need to close the existing ones. Choice is purely yours.

 

[princeoo7]

1- Yes but not recommended as it might spoil your cibil. I have done on my Yes bank cc where unfortunately on that day I was only carrying that single credit card and shopped exceeded the credit limit. I did informed the bank the next day and they put some charge on that transaction and later increased the limit.
2- I have made it to 1.5k only and disabled on most of the cards.
3- Didn't get you... credit card has its own separate account aka credit limitso it shopping amount gets deducted from it.
4- You can have as many cards from same bank and not necessarily need to close the existing ones. Choice is purely yours.

so for point one, lets assume I have a product to buy which is worth ₹140 but my cc limit is ₹100. I can buy the product directly with cash but as I want to show the spending on the cc, I will normally use cc but as per you it will cause problem, right ?

 

[nRiTeCh]

so for point one, lets assume I have a product to buy which is worth ₹140 but my cc limit is ₹100. I can buy the product directly with cash but as I want to show the spending on the cc, I will normally use cc but as per you it will cause problem, right ?

Problem as in some banks allow transactions beyond the defined credit limit and yes it will affect your cibil score eod. So not recommended unless an absolute necessity..

 

[kalph09]

1) Yes, you can. There are fees attached to it. I have crossed the limit couple of times due to emergencies. There might be a few points off CIBIL but not significant. In such scenarios call up the bank to increase the spending limit.

2) Most banking app allows you to set contactless payment. Keep it to minimal as possible to avoid accidental taps or theft. I have set one card on 4k (mostly used for fuel) the other for 2k.

3) Doesn't matter where you spend. It is deducted from your spending limit.

4) This is a trap. Close first and open a new one. I asked for an upgrade once. They sent me a new card and did not close the other despite being clear on my ask. Had to fight my way out.

 

[buzz88]

I think the above two guys have answered your questions, but I will add my two cents.

1) Try not to cross the limit. Avoid paying those "fees". If you need to buy something more expensive, plan it ahead and ask the bank to increase your limit. It's easy to get the required limits if you are earning well and have good banking habits.

2) 1000 to 2000 should suffice. This is the mode for making small purchases like tickets or drinks/food. So what you are buying using this mode should tell you how much your limit should be.

3) If you are disciplined shopper and not spending extra just because it's on credit card, then yes, every purchase should be done through the card. It gives you a ease of access, rewards and better control over your spending habits. But no matter what you spend on, the amount is always deducted from your Credit card limit, not the bank account that is connected with it.

4) Get the card you want and then close the ones you don't want. There is no limit to cards you can have, but it is better to keep that number to a minimum that you can handle. More cards, more risk of losing them or forgetting to pay the bill on time.

 

[raksrules]

One more important thing...NEVER pay "Minimum Amount Due". Always pay "Full Amount". If you pay minimum amount, then interest starts building on remainder of the amount and credit card interest rates are very high.

Another as you told, do not ever remove cash using credit card unless you have no other options as that too has very high interest rate.

I personally try to buy whatever I can using a credit card as I get points and get some extra time to pay off that amount. On top of that sometimes good offers come on credit cards, especially during diwali and such sales. And with No cost EMI, it sometimes works in our favor as we have now distributed a big amount across multiple months.

 

[princeoo7]

One more important thing...NEVER pay "Minimum Amount Due". Always pay "Full Amount". If you pay minimum amount, then interest starts building on remainder of the amount and credit card interest rates are very high.

Another as you told, do not ever remove cash using credit card unless you have no other options as that too has very high interest rate.

I personally try to buy whatever I can using a credit card as I get points and get some extra time to pay off that amount. On top of that sometimes good offers come on credit cards, especially during diwali and such sales. And with No cost EMI, it sometimes works in our favor as we have now distributed a big amount across multiple months.

yea I forgot to mention this. always pay the amount within 50 days period.

I think the above two guys have answered your questions, but I will add my two cents.

1) Try not to cross the limit. Avoid paying those "fees". If you need to buy something more expensive, plan it ahead and ask the bank to increase your limit. It's easy to get the required limits if you are earning well and have good banking habits.

2) 1000 to 2000 should suffice. This is the mode for making small purchases like tickets or drinks/food. So what you are buying using this mode should tell you how much your limit should be.

3) If you are disciplined shopper and not spending extra just because it's on credit card, then yes, every purchase should be done through the card. It gives you a ease of access, rewards and better control over your spending habits. But no matter what you spend on, the amount is always deducted from your Credit card limit, not the bank account that is connected with it.

4) Get the card you want and then close the ones you don't want. There is no limit to cards you can have, but it is better to keep that number to a minimum that you can handle. More cards, more risk of losing them or forgetting to pay the bill on time.

Like the example given above. if the product cost ₹140 and I have a limit of ₹100 but from that ₹100, ₹40 is recommended spending limit. what should I ask the bank as a limit. its all within my spending limit based on salary ...

if bank says they will raise it to ₹140. so now I can buy the product but as ₹140 is 100%, and I pay the amount next hr, day or week, will this affect my CIBIL score ?

 

[jinx]

will this affect my CIBIL score ?

You should really stop worrying about this. Just make sure to pay the dues on time. No one can predict credit scores, in fact the algos keep on changing. Dropping 20,30 or even 50 points isn't a big deal, as long as you're paying dues on time it'll come back up. Also if you're utilizing most of your limits frequently then the credit card provider will most likely increase the limit(again, as long as you're paying dues on time).

I pay the amount next hr, day or week, will this affect my CIBIL score ?

Credit bearues don't get info on individual purchases they just get the final amount on the statement generated. So if you pay off your credit card before billing date, it won't show up in the credit report.

 

[princeoo7]

Credit bearues don't get info on individual purchases they just get the final amount on the statement generated. So if you pay off your credit card before billing date, it won't show up in the credit report.

is this a good thing or bad thing.

 

[jinx]

is this a good thing or bad thing.

Honestly? idk (I don't think anyone knows it either, too many variables to account for)

Pros: Since the balance is 0, it won't look like you're credit hungry -> less risky customer
Cons: Since the balance is 0, it would look like you haven't used the card at all -> customer not utilizing credit

 

[nRiTeCh]

Most importantly, do not fall for those credit transfer/pay type cards unless you getting one free! Many people got spoiled owing to that like paying x card bill through y credit card and so on for 90 days. This policy spoils you when in the last 80th day you find yourself in a horrendous situation to make those lacs of accumulated payment owing to no monies!
And always make full but timely payment!

Dont get that habitual or hooked to it else like many people your salary will only be spent paying bills with little to no savings in your bank!

if bank says they will raise it to ₹140. so now I can buy the product but as ₹140 is 100%, and I pay the amount next hr, day or week, will this affect my CIBIL score ?

Why run in hurry? Always make payment after bill generation, making advance payments isnt gonna help with any benefits.

 

[blr_p]

Well I am new to the world of Credit Cards and know very little on the matter, so lets discuss on the same here

Let's start with something basic. Why are you getting a credit card in the first place ?

A debit card means no interest. It means you don't buy unless you have the funds and acts as a brake on consumption. Self organising. Can't get into debt if you can't buy.

You don't get much offers but then this leads to other headaches like i must buy so much each month and in these places only and what not to benefit.

Lots of maintenance.

Somebody here told me a while back its to get you into the habit of buying for life. Programming. Good for the economy. Not so great for you considering how people lose control of their spending habits.

So why ?

 

[jinx]

So why ?

There's one really good reason - purchase protection

I make all risky purchases with my credit card. Can't count the number of times AMEX has saved my ass.

Sure, you may not win all disputes but with a debit card there's literally no way to get your money back.

 

[buzz88]

Let's start with something basic. Why are you getting a credit card in the first place ?

A debit card means no interest. It means you don't buy unless you have the funds and acts as a brake on consumption. Self organising. Can't get into debt if you can't buy.

You don't get much offers but then this leads to other headaches like i must buy so much each month and in these places only and what not to benefit.

Lots of maintenance.

Somebody here told me a while back its to get you into the habit of buying for life. Programming. Good for the economy. Not so great for you considering how people lose control of their spending habits.

So why ?

This is a very conservative view. Everything around us is designed to make us consume more, from gaming to TV to other media. The whole economy runs on making consumers consume more. Doesn't mean we give up on modern comforts and consumption itself. I understand your point that unless one needs a credit card, one shouldn't take it. But it is not a scam that we should be actively avoiding. It has its uses and it has its cons. Be a disciplined user and take advantage of its features without falling to its traps and abusing it. Purchase protection as mentioned by @jinx, savings upto 10% discounts during sales, 1-5% reward points, No-cost EMIs etc. make it much much more rewarding than debit cards.

 

[blr_p]

I make all risky purchases with my credit card.

Are these overseas purchases ? because that is another reason to have a card

Otherwise what is a risky purchase for you if you mean domestic. Not had any. I buy from ecommerce sites or in shops that will exchange if products are not as advertised. Fraud risk is low. Unless you deal with dodgy internet sites.

My attitude is once i buy the money is as good as gone anyway since refunds are out of the question for many things in this country.

There is not much try before you buy in this country

Purchase protection as mentioned by @jinx, savings upto 10% discounts during sales, 1-5% reward points, No-cost EMIs etc. make it much much more rewarding than debit cards.

To avail those discounts what is the catch ? how much is minimum quota or business per year you have to generate

Then there are levels, buy more get more rewards.

Maintenance. Hooked.

Because we all want more

 

[technofast]

What will happen if we don't use the credit card for more than a year? I have couple of cards which I have not used more than a year now. Will that affect the CIBIL score?

 

[princeoo7]

Most importantly, do not fall for those credit transfer/pay type cards unless you getting one free! Many people got spoiled owing to that like paying x card bill through y credit card and so on for 90 days. This policy spoils you when in the last 80th day you find yourself in a horrendous situation to make those lacs of accumulated payment owing to no monies!
And always make full but timely payment!

Dont get that habitual or hooked to it else like many people your salary will only be spent paying bills with little to no savings in your bank!


Why run in hurry? Always make payment after bill generation, making advance payments isnt gonna help with any benefits.

Not about to be in hurry. I have the cash as it was for purchase of the product. got card for discounts when purchasing in future. now as the cash is there. I can show the purchase on the card and then pay the amount for the card as don't want to keep it pending is what was on my mind.

Let's start with something basic. Why are you getting a credit card in the first place ?

A debit card means no interest. It means you don't buy unless you have the funds and acts as a brake on consumption. Self organising. Can't get into debt if you can't buy.

You don't get much offers but then this leads to other headaches like i must buy so much each month and in these places only and what not to benefit.

Lots of maintenance.

Somebody here told me a while back its to get you into the habit of buying for life. Programming. Good for the economy. Not so great for you considering how people lose control of their spending habits.

So why ?

Normally I was not in for a cc but the discount is some good stuff which I would have enjoyed for before purchase but as I didn't had one and it feels very sad to ask relative for their card every time, I got the card.

What will happen if we don't use the credit card for more than a year? I have couple of cards which I have not used more than a year now. Will that affect the CIBIL score?

from what I read, they will / can close the card now if its not in use. something like this was printed on the documentation but I don't see that happening as closing door for potential client is not so rewarding for banks.

There's one really good reason - purchase protection

I make all risky purchases with my credit card. Can't count the number of times AMEX has saved my ass.

Sure, you may not win all disputes but with a debit card there's literally no way to get your money back.

how does the protection on cc works while the purchase is done online or offline. please share your valuable experience

 

[silverstar]

Can I purchase good's exceeding the Credit Card limit when I have cash in account and can pay directly but instead of debit card want to have this transaction on credit card as it gives reward points and we can have the spending quota fulfilled as well side by side.

You should never exceed your credit limit as many folks already mentioned but YSK that some banks like HDFC offer credit cards with a 105% overdraft limit on specific cards. It's a marketing gimmick obviously but if your credit limit is say INR 100 you can spend upto INR 105 and not incur any penalties. I haven't used such cards personally and don't ever recommend exceeding the credit limit in the first place

 

[princeoo7]

You should never exceed your credit limit as many folks already mentioned but YSK that some banks like HDFC offer credit cards with a 105% overdraft limit on specific cards. It's a marketing gimmick obviously but if your credit limit is say INR 100 you can spend upto INR 105 and not incur any penalties. I haven't used such cards personally and don't ever recommend exceeding the credit limit in the first place

HDFC is one of the most stupid AFAIK lender. the only reason I am in an cc is discount, cashback and CIBIL score improvement. so not looking to spend a fortune on to it. the only thing is I need to spend a amount to get it life time free and as I was planning to get the products, why not buy them with cc, complete the quota as well as increase the cibil score if it does ...