There are a world of benefits you can accrue with smart usage of credit cards. Here’s 5 of them that help you save some money.
1: Eat for less with dining offers
Most cards these days are associated with some of the other restaurant chains or coffee shops. You just need to find out which ones are partnered with the card you use.
You could just ask the restaurant/shop if they offer discounts with any particular card. You will be surprised to find out how many times the answer comes with the name of one of the places you visit frequently. For example, Citibank has a tie-up with Cafe Coffee Day.
Power user tip: If you don’t have a credit card yet and is shopping around for one, make sure you do a bottom-up approach. Identify the restaurants/coffee shops you regularly visit and choose a card that is already offering a discount for that particular restaurant/coffee shop.
2: Take vacations for free
One of the advantages of co-branded credit cards are that they let you accumulate rewards over a long term.
For example, a JetPrivilege co-branded card will give you up to 5 miles for every Rs 100 spent and the miles are valid for 5 years. This means that if you spend around 20,000 a month, you will get 12,000 miles per year. Over a 5 year period, with just 10% increase in spending per annum, you can accumulate enough miles to fly a family of 4 anywhere in India.
Pro-tip: The typical reward system does not work the same way you think it might. For example, in case of Jet, 1 JPMiles is not equal to 1 rupee. Also, the JPMiles required for travel in a year between two destinations are pre-set. It’s best to use these reward points when you are booking your travel suddenly and the ticket rates are very high.
3: Save on your daily commute
Credit card companies have tie-ups with fuel retailers. While some credit cards charge an additional 2.5% surcharge on fuel purchase, considering it is one of the most frequent expense on an average credit card, others waive if off completely. Some cards offer the surcharge waiver as cash back for fuel purchases.
Power user tip: Not all credit cards are the same. Look for the co-branding and choose a card that you can use in your frequently visited pumps. There are also cards like those from standard chartered which don’t have a co-branding, and yet, give discounts across multiple fuel providers.
4: Save even more money shopping online
Ever went to an ecommerce portal and saw “extra 10% off on XYZ bank credit cards”?
Credit card companies tie up with ecommerce players. If you happen to have the particular bank credit card, you could get an extra discount (subject to the maximum discount). Next time you visit an ecommerce website like Flipkart or Myntra, make sure you check out the credit card offers they have for the day.
Pro tip: Credit card offers get rotated. Before you make the purchase or try and get the credit card which has the offer running, wait for a week or two and see if an offer for the credit card you already hold comes up.
5: Ask for it
Sometimes you just have to make that call and ask your credit card company for the benefit. Ask for your annual fees to be waived or for a lower interest rate on the unpaid amount.
Pro tip: If you have a good standing with the credit card company, you can even ask for a payment holiday in case you have a cash crunch for a particular month.
Some more tips to save money with credit cards
- Go for credit cards without a co-branding– in case of frequent travelers, it might not be ideal to stick to one airline only. Credit cards such as Citibank premier miles lets you accrue miles and redeem against a number of airlines as against one
- Make use of insurance tied to your credit cards- Many credit cards offer lower premium health and travel insurance policies for credit card holders. While you should definitely have a separate insurance policy (even if your employer provides you one), you can use your credit card insurance scheme as an extra cover
The other side of the coin
While credit cards offer great benefits, improper use could lead you into a debt trap. Here are a few pointers to keep in mind while using plastic money.
- Be careful about zero interest EMIs: Most banks hide the interest as processing fee. So the zero interest EMI on a mobile that costs you INR 10,000 might actually be INR 11,000 when you factor in the processing fee
- Always pay in full- every month: Check with the bank and enable auto debit for your credit card. Carrying over your existing charges to the next month or beyond will attract huge interests in the range of 20-40% per annum
- Rewards points don’t tell you the full story: Just like the example of JPMiles I shared earlier, reward points might not be what it appears to be. For example, some bank credit card reward points can be redeemed only against products offered by the bank’s online store for their credit card customers. Most often, the redemption points required here are much higher than what you’d end up paying as cash otherwise. That’s if you find something you are interested in getting in the first place.