Credit Card - Posititve Points - Reward Points

With every transaction on Credit Card you get Bonus Points which you can redeem for free gifts or sometimes in cash equivalent (Its true... long back when lifetime free was not a norm, my Dad once paid his annual fee with the help of Credit Card bonus points).

This reward point structure varies from Bank to Bank. Sometimes it is flat and sometimes it depends on your transaction volume. The more points you earn, the more gifts you can redeem.

Sometimes, apart from reward points, now a days you can also get cash backs. Card companies are advertising a lot about 5% assured cash back on any transaction. This may have certain catch (read the fine print) but sometimes you can actually get certain cash back for filling petrol from particular petrol pump (and swipe on a machine from a particular bank) or shopping from a particular super shop. The fine print here is regarding a maximum cash back capped at 500 Rs or it is 5 reward points for every 100 Rs spent.

This cash back and Reward Points are definitely a plus of using Credit Cards.

Credit Card - Posititve Points - Cheaper Goods

This might sound contradictory to earlier post but it is true as well.

Sometimes you see offers on Credit Card of a particular bank whereby you are offered discounts on use of Credit Card of that particular bank. These banks have tie-up with some merchandise and you actually get certain discounts.

For example, certain websites offer you 10-30% discounts on air fares if you use particular Credit Card or sometimes you get EMI facility without any charge (Check this twice to be sure... sometimes they charge processing fees which is ridiculously high). In certain deals you get good bargain because of some promotional event going on at the same time.

Also, if you pay your telephone bill through Credit Card, few companies offer you incentives like 100/200 free SMS or few free local call minutes.

However, make sure not to buy something only because of such offers when actually you may not be needing it... I am talking particularly to my female friends...

Another positive point of Credit Card in next post.

Credit Card - Posititve Points - Free Credit

As the name 'Credit' Card suggests, these cards give you credit which is absolutely free for some duration if you have not committed any sin (of the three which we discussed earlier).

e.g. If my Credit Card statement is generated on 28th day of every month and my due date for payment is (typically) 18 days after that. Then I have these 18 days time period to park my funds somewhere else. This credit period of 18 days is absolutely free period for me if I pay by this due date.

Moreover, if I am smart enough to make a transaction on next day after the statement is generated i.e. on 29th, then this transaction will be reflected in the statement which will get generated on subsequent 28th. So in actual, for that transaction, I get a credit period of 31 plus 18 days which is quite high to be free.

Honestly, I have done this many times. I bought a Galaxy Tab for my Bro using above trick and enjoyed almost 45 days of interest on my money which was still lying in my account. In fact, in India at least, many transactions do not get reflected in Credit Card statement instantaneously. So many transactions which I do on 28th late afternoon or evening do not appear in the statement generated at the end of the same day.

Very small things but goes a long way to help you utilize your card effectively. Hope this point is clear.