Are you leaving money on the table?
Credit Cards are a boon, that people don’t utilise.
“Don’t use credit cards; they might get you into trouble.”
A lot of people might be familiar with the above statement, considering the general hesitation Indians have around borrowing money.
A credit card is something which is usually deemed scary, people run away from it. Why? Because credit cards have always been associated with situations or scenarios leading to bankruptcy or debt traps.
No person in his sane mind would want to fall into either of those situations. Right?
Well, credit cards are definitely a double-edged sword, where on one hand they offer super convenience at times when you are low on money, and that too as an interest-free loan for more than a month.
On the other hand, if not used properly, or if you lack financial discipline or are an impulsive shopper, then using credit cards you could be digging your own grave.
However, apart from the above 2 extremes, there is always one aspect of credit cards that is often overlooked or ignored, the reward points, which, if used wisely, could give you at least 3 days of vacation every year all sponsored by just your credit card reward points.
Seems unreal, doesn’t it?
It is primarily because such credit card secrets or hacks have been gatekept from you all this while.
To use credit cards effectively and utilise the full value of credit card reward points, let’s first understand how credit cards actually work.
Credit cards allow you to borrow money from financial institutions, usually banks, to make purchases, where they set a credit limit on it that you can spend up to. The credit limit usually depends on your current income.
Each month, you receive a statement which shows all the transactions you made, using that card, and it also gives you a due date by which you have to repay the amount that you spent using the credit card.
Now the catch is, that many credit cards offer rewards like cashback, points, or travel perks when you make payments through those credit cards on certain merchants.
These earned rewards can be redeemed in terms of cash, or they can be used on flights or hotel stays which will make your vacations a lot cheaper than they usually are, making the card very appealing to use.
I’ll give you 2 examples to better understand the reward system, one for a cashback card and one for a travel-friendly card.
Every adult has at least some utility bills to be taken care of, no matter if you have an income or not. Mobile recharges are the primary utility bill that everyone pays for.
Airtel, the telecom giant has a co-branded credit card with Axis Bank, which is called the Airtel Axis credit card.
The value proposition of the card is brilliant when it comes to utility payments. If you use that credit card to make utility payments like electricity bills, gas bills, mobile recharge, you’ll get straight 10% cashback, even on food platforms like Swiggy and Zomato, you’ll get 10% cashback when you make payments using this credit card.
Not only that, the cherry on the cake is, if you are an Airtel user, who uses Airtel Telecom and Internet services, you get a huge 25% cashback on your Airtel bills when you pay it using the Airtel Axis card.
That feels like quite a deal. Right?
The Airtel Axis credit card value proposition chart explains that a person with decent spending on utility bills could probably save more than 10000 rupees per year.
For a middle-class person living in India, saving 10000 rupees on just a few online spends and that too on utility is pretty decent.
Let’s look at another example.
HDFC Bank has a card known as The Infinia credit card, which is usually targeted towards people with an annual income of more than Rupees 36 Lakhs.
The Infinia card is a premium option designed to offer significant benefits on hotel stays and flight spending, for people who are frequent travellers.
When you book hotel stays and flights using the Infinia card, you earn accelerated reward points, often 5X or 10X of the base rate, obviously depending on the merchant or platform, it is as good as earning points worth rupees 20–30 on every 100 rupees you spend.
Now, the accelerated reward points that you have earned can be redeemed for future bookings or purchases, which will help you save a significant amount of money on your next outstation trip.
Additionally, such credit cards often provide access to a variety of travel perks, such as airport lounge access, complimentary upgrades, etc to enrich your travel experience.
Either you can use a purely cashback-centric card which helps you save money in the form of cashback or if you are a person who loves to travel, a card which rewards majorly on travel spends might be a better choice for you.
Now, knowing all this, don’t you feel you are leaving a lot of money on the table if you are not using a credit card?
I’ll end this with a line I love from Mark Cuban,
“Being a smart shopper is the first step to getting rich”
The question is “Are you shopping the smart way?”
