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Handle your credit card with care

By Ankit Sharma
October 31, 2015 13:00 IST
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A convenient product when used smartly, it has its pitfalls too if you used recklessly

Credit cards have blessed us with enormous comfort. Buying expensive stuff is no longer a problem and the shopping experience is quite tension-free since you do not have to worry about your cash being stolen.

For some, it is luring as it offers rewards and cash-back while for others it is a cool status symbol to flash a credit card. There is a wide variety of credit cards available with various issuers. For instance, gold and platinum cards are meant for premium segment customers with high incomes and net worth. These premium segment cards have higher credit limits and also benefits like travel insurance but these come with higher charges.

Co-branded cards are increasingly becoming popular. They carry the name of a third party, which may be a retail outlet, airlines and so on. They usually benefit you when you purchase products from the third party e.g. ICICI Bank-Ebony credit card.

A credit card is a useful tool, only when managed judiciously but there's a lurking danger if you mismanage it. Due to the ongoing financial crisis, banks have become wary of the credit card defaults and are changing their credit limits, doing away with interest free periods and charging higher interest rate on the credit borrowed. ICICI Bank has recently announced that it will block all the cards of its customers in case they default even on a single one.

Therefore it becomes imperative for you to handle your credit card with utmost care.

Understand the product

If you are a first-timer to the world of credit card, spend some time in understanding the product. Read the terms and conditions, when you apply for a credit card. It could be a laborious process but something that has to be dealt with, to protect yourself from any rude surprises that might be in store for you in times like these.

Ask your friends and relatives who use these cards about their experience. At the time of availing a card, get a complete grip on the payment terms, billing cycle, interest rates and add on offers. A good understanding of these can help you plan purchases in a manner that can get you maximum free credit days. Before swiping your card, ask yourself if you really want to buy that product and make a rough calculation of how much credit limit you are availing.

Adhere to dates mentioned

Stick to the dates mentioned. The best thing to do would be to make full payment for the bills, though in tight situations ensure that you have paid at least the minimum bill amount. In such cases, the credit card issuer will charge interest for the balance due for payments.

Switch to online mode

Billing and non-receipt of card payments are the most common problems that credit card users face. It can be avoided if customers switch to online mode for various facilities such as subscribing for e-statement as it removes the difficulty of having to wait for the snail mail.

Similarly instead of dropping the cheques at drop boxes and collection centres, avail online payment modes such as PayBill and BillDesk. These transactions are time saving and make life easy for customers and banks.

Most credit card issuers offer the facility of the cash advance feature (where you can withdraw cash against your card just like an ATM. If you hold a separate ATM card, avoid resorting to this option until you are in dire need of cash as these transactions carry very high interest burden (25-30 per cent per annum).

Make sure that you are on a secure site

With internet facilities improving, on-line shopping is an easier option. However, you should take a few precautions. When you enter your card details during the payment process, make sure that you are on a secure website. See if here is a tiny padlock icon on the screen. The website should start with 'https'- the 'S' signifies that the website is secure.

Maintain secrecy

You should respect the security features and adhere to security procedures in order to have a safe card usage. Do not disclose your card or CVV number. Protect your personal details at any cost. Adopt safe transaction procedures such as MasterCard Secure or Verified by Visa for the internet transactions.

Photograph: Rhys A./Creative Commons


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Ankit Sharma