Dussehra 2015 is around the corner and festive season shopping is in full swing. While money cannot buy you happiness, it definitely can get you in trouble if you are not careful in wielding your credit card in the season of lights. Also, it is essential to know and understand the pros and cons of spending plastic money to benefit from it in the best possible way. So, here we present 10 facts about credit cards that you must know:
1. Cash on Credit card is expensive
Credit card holders do have access to cash from ATMs in India as well as overseas. A transaction fee is applicable on every such transaction. It may be a fixed amount or a percentage of cash withdrawn. Generally, whichever is higher. Also, a service charge is applicable on such transactions from the date of withdrawal to the date of settlement.
2. Did you check out the fee?
Request the credit card provider for a list of applicable charges and study the same. That is the best way to avoid surprises in the credit card bill. Typical list of charges will include the joining charges, annual charges and renewal charges. Check with the credit card provider for a waiver on these charges while shopping for credit cards. Other charges include the late fee charges and the OTC charges. OTC charge is the charge applicable and levied by credit card providers if the card holder walks into one of their branches to make a payment.
3. Think before swiping that credit card overseas
In addition to the currency conversion rate applicable on converting Indian rupee to any other currency, a foreign currency transaction fee will be applicable. The exchange rate is determined by the VISA/Master card, whereas the foreign currency transaction fee is charged by the credit card provider. This fee is approximately 3.5% of the Indian rupee converted amount.
4. Keep the credit card blocking details handy
Prior to reporting of the loss of the card, the card provider is not responsible for any transactions incurred on the card. Hence, in case of theft or on losing the card, inform the same to the card holder on priority and block the card. Also, check with card provider for other situations when the liability of the card is on you.
5. What’s my credit card reward?
Rewards are one of the most attractive features of the credit card. An attractive reward scheme even drives the decision of the customer to purchase the card, in many cases. However, in order to benefit from the reward scheme it is important to know the validity. One needs to make a specific note of this as the reward validity is often missed out.
6. Application and flagged reports
The credit card company accesses the CIBIL report of the applicant, before issuing a card. Every time a report is accessed, it is flagged. The CIBIL report helps the card provider understand your credit behavior and history. If you make applications to multiple card providers at the same time, then they can view each other’s flags on the report. Multiple checks causes alarm and this can be a likely reason for application rejection.
7. Avoid late payment fees
The credit card bill stipulates a time on the bill, by which at least a minimum amount has to be paid. Failure to do so results in late payment fee being levied. While the late fee amount may not be large, frequent late payments may prompt the card provider to access your credit worthiness. The card provider may also decide to cut down on your credit limit on these grounds.
8. Repayment and CIBIL report updation
In case you plan to get a loan in the near future, it is important that you check on your CIBIL score and report. Lenders largely rely on the findings of this report. It has to be favorable enough to encourage the lender to lend to you. Credit card dues are reflected in the report. Dues need to be cleared to avoid any red flags on the report and to build the score. It takes around 60 days for the report to be updated post payment. One has to time the lending application, post repayment, accordingly.
9. Credit card attracts taxes
While calculating the cost of the credit card, one must consider the service tax component which is mentioned on every bill. Since credit card is a service provided to the customer, this tax is applicable and has to be paid.
10. Credit card dues are a priority
There is only one secret to make optimum use of this amazing product called credit card. That is, clear your monthly dues with no excuses for even a single day’s delay. Paying late fees or interest on the monies used is definitely not recommended. It also impacts the CIBIL report in unfavorable ways. Credit discipline and timely repayments definitely pay off in the long run.
It’s now time to swipe those cards for happiness as we ring in the festive season. Happy Dussehra to all!
By Credit Vidya