10 Things to be remembered by Credit card users
Sridhar is using various credit cards. Since these have been issued without any opening charges, Sridhar started using it for various purposes missing payment dates, paying interest for delayed payments etc. Now when he went to take home loan, bank indicated that due to bad credit score, he would get housing loan at much higher interest rates. This is classic example on how one would suffer if credit cards are not used properly. In this article I would detail about various things to be noted and precautions to be taken by a credit card user so that he would not get into such problem of bad credit score.
10 Things to be remembered by Credit card users
Also Read: What is virtual credit card and how does it work
1) Apply for credit card which you can benefit
This is simple rule which I follow. I had ICICI Credit card which I have been using for long time. But when I go for fuel, I need to incur surcharge on fuel. Means for every Rs 2,000 fuel, I would pay around Rs 50 to Rs 100. Two years back I have applied for Citibank Indian oil credit card. While I am using this for other shopping purpose too, I am also able to avoid surcharge and able to save up to Rs 400 per month. You should buy credit card based on your utilization. If you are frequent flyer, you can opt for Jet airways credit card which are offered by various banks. You would get several loyalty addition points which you can redeem at a later point of time and get a free trip too.
2) Use Virtual card for online shopping
Many of us would be using credit card for online shopping. You cannot make out from a website whether this it is trusted or not. Instead use virtual credit card for online shopping. Virtual credit card is offered by most of the banks which would work similar to credit card. However it can be used only once and within a specific time limit. This is a wonderful option if you want to do online shopping and are not sure whether you can trust a particular website or not.
3) Use credit card only when required
When I told this to one of my friend Sridhar, he laughed at me. He says credit card is given to make use of it. I hope most of you would disagree on this statement. Credit cards should be used only in lieu of cash. This is a wonderful option provided by banks where you can spend money without having anything in your bank account at that moment.
4) Pay your dues on time
Don’t laugh at me when I say this. If you delay your payment, there would be late payment charges. You also need to pay interest on the delay. This would affect your credit score. In future, when you really want a loan for big investments like taking home loan for property, you need to pay higher interest rates due to bad credit score.
5) Make full payment and not minimum payment
Banks are clever. If you see credit card bill statement, there are 3 main fields in it. It would indicate the bill due date, credit card amount and min amount of payment. Very often, people would get tempted by look at this min amount to be paid and want to try for that. While you would not pay any late payment charges, you need to pay interest for the outstanding from the date of generation of bill and not from the due date.
6) Safeguard your credit card
I subscribed for e-mail and mobile alerts. When I go for fuel filling for my car, while the fuel person swipes the card, I would get instant message about the amount he swiped. I keep hearing from people that fuel people may swipe your card twice, hence we should be careful. If you have such mobile alert facility, you need not worry about such cases.
7) Avoid using at phone shopping
Some of the merchants are now using credit card on phone shopping. Means if you order something on phone, they would charge back to your credit card and you need to key-in the credit card pin from your mobile. You may need to little careful when you are dealing with any new merchants. It would be better to completely avoid such payments on phone shopping.
8) Keep your CVV number safely
To do online shopping, you need to indicate CVV number (last 3 digits of the code which is there on back side of your credit card). Generally we keep this as-is without striking it off on credit card. When you go for fuel filling or give credit card at any shopping mall, there are high chances that people can note that and later can miss-use for online shopping.
9) Report immediately about credit card when lost
I generally keep credit card number and other bank card numbers (not passwords) at one place in printed form. One printed copy at home and one soft copy with me at office (with password protected). In case you have lost your credit card, you should be able to report to bank within few minutes or few hours. If you are still struggling to check what is your credit card number, then the damage would be high.
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10) Keep updating any changes of your address
I have given office address for my first credit card in 1999. While I have changed my location, I missed to update it. All credit card statements were going to wrong address. Later I realized and corrected it. While I do not see much risk in credit card statements going to wrong address, but it would be danger in case new credit card is sent to wrong communication address.
Conclusion: While it looks simpler to use credit card, if you do not consider these points, one side you end up paying higher interest rates or late payment charges and other side it would affect your credit score. Bad credit score would hurt you with higher interest rates for personal loans or home loans.
Readers, what are your experiences on credit card usage. What precautions you would take to avoid any fraud?
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10 Things to be remembered by Credit card users
adding on to the below, can you also please suggest other similar credit cards which has special offers for petrol users.
Keerthi, I need to do some analysis to post this. Give me some time.
Thanks for the valuable information. I had applied for INDIANOIL CITIBANK PLATINUM CREDIT CARD through online. But was rejected stating the min age requirement for credit card is 25 years. Please find the below response email
Thank you for your application for a INDIANOIL CITIBANK PLATINUM CREDIT CARD
We have reviewed the application and the documents submitted by you.
We regret our inability to process your credit card application as your age does not fulfill our internal credit processing criteria.
Can you let me know is the min age requirement policy exists because as far i am aware, other banks are willing to offer for below 25 years of age also. I am salaried employee of 24 years of age.
I am surprised to see this Keerthi. There is no such minimum age criteria as per my knowlege. Try applying for credit card for private banks like ICICI or HDFC or SBI
Very good information for credit card users.I am using credit card of ICICI bank & HDFC bank from last 10 years without any problem. I would like to add few more tips:-
01) It is better to link up your credit card with your saving bank account of the same bank. Hence you need not to remember due date of payment and amount will directly debited from your account on due date.By this way one can avoid penalities and may keep good payment record.
02) Credit card must be password protected for online use.Mostly all credit cards are providing such facility to the customers.In this case nobody can miss-use a credit card just by knowing card details and CVV number.
03) During petrol filling try to use a credit card above the amount on which fuel surcharge is not imposed by the bank.By this way one can avoid paying additional amount.Some banks has defined this limit as Rs.300 or Rs.500.
04) One may save money by keeping a watch on various offer provided by credit card time to time.Recently I saved 15% of selling price during online purchase of Samsung Galaxy Grand mobile and payment on 12 installment without any additional fee.
Useful article, Suresh. Wholly agree with you. Still cant understand how people treat both the credit and the card so carelessly.
Question: A friend of mine told me that he has a HDFC Credit Card that charges 0% interest. As a result, he has been postponing his total payment indefinitely, He pays only the minimum charge every month. I've been telling him, but he is adamant that his card charges 0% interest only. Do you know of any such card?
Karthik, No bank would provide free credit with 0% interest. I am interested to know about that card. If possible, get some hints, i would analyse.
I am unaware of any bank in India offering such a deal. The closest you can come abroad is Citi Simplicity Card, which hopefully might be launched in India going with Citi's agressive approach in the Indian market.
"Citi plastic promises no interest on purchases or balance transfers for 18 months, no annual fee, and no late fees “EVER” (all caps!)."
It is a HDFC Titanium card. Apparently he got a "special offer" in which they said 0% interest. He continues to refuse to believe me. 🙁
Have you heard of *any* credit card in the history of Indian credit cards that offered zero interest rate?
I too have a HDFC credit card, but they don't have completely 0% interest card. What HDFC (or any other bank for that matter) does is provide 3 months 0% interest period during some festival season. During this time as long as you pay just the minimum balance, you don't have to pay any interest on the total bill, but you need to pay off the entire bill within the end of 3 months anyway.
There was such a 3 month period last year and from this month too (beginning from august) too they have started such an offer.
I do pay up the entire bill amount even if they provide such interest free periods as I don't want to keep track of these and forget some payment.