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SMART tips to use your credit cards

April 21, 2011 14:33 IST
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In an online chat with Get Ahead readers on April 20 Kunnath Santosh of Perfios gave tips to readers on how they can become smart credit card users.

Here's the unedited chat transcript:

Vijay asked, Sir, i have a huge credit card balance above 20 K. I only keep on paying minimum amount due. Is that good strategy? how do i clear my dues. I am depressed.
Kunnath Santosh answers,  at 2011-04-20 16:03:13@ Vijay - paying just the minimum amount is not sufficient as you are being charged very high rate of interest on the remaining amount. The interest charged could be any where in the range of 30-40% p.a. If you have the liquidity I suggest you pay the complete balance. But if you dont have the money try and take a personal loan and pay off the credit card balance. At least you will be able to move to lower cost liability.

Glen asked, Am vying to take credit card(I dont any as of today) which one's available in the market are good.What do I need to see whilst going in for one? How do I get it?
Kunnath Santosh answers, There are lots of different types of credit cards available in the market, the best one for you depends on your usage. Some basic features that will be there on all cards: 1) Total Credit Limit: Try and take a credit limit that you may need and can also easily pay. Dont try to take a credit limit that is way beyond your means. As times people using credit cards, do loose control of their spending. So better to stick to your budget. 2) Interest free period (ranges from 30-45 days)- Longer the interest free period, the better the card would be. 3) Cash withdrawal limit: Typically, I would not recommend withdrawing cash from your credit card until and unless its absolutely urgent and necessary. 4) Reward points: A good reward point system, where the points do not lapse and can be redeemed against other facilities would be great. Apart from this there are lots of jointly branded and marketed credit cards. Cards that come esp for ppl who book lots of train tickets, air tickets, shopping etc. So therefore see where you are most likely to use the card and try and search for such cards.

Bitty asked, I have got 3 credit cards..Can I do balance transfer from one card to another
Kunnath Santosh answers, Yes, you can do a balance transfer. But make sure that your credit card does not charge you anything for the transfer. This depends from co. to co. At the same time, I would recommend that you avoid using too many cards if you cant pay for them.

Nash asked, Can I use 1 creditcard to pay the balance of another credit card?
Kunnath Santosh answers, Yes, you can. But make sure that charges are not very high and dont do this as a regular practise.

red asked, I have 1 credit card which i am using frm last 8 yrs. my credit limit is high but i dont use much except air tics or train booking. do i need to go for other cc? My one cycly statement bill comes ard 3000
Kunnath Santosh answers, Do not go for another credit card if you dont need it. In case you are not using the complete credit limit given to you, you may actually ask the co. to reduce the credit limit. That way you will be protected in case of any fraud.

V asked, @Kunnath: Which credit card to take Please advice
Kunnath Santosh answers, As I have suggested earlier, go for a credit card as per your requirements and preferences. There are cards specifically for shopping, tickets, petrol etc.

vivek asked, i dnt get credit card 'coz of some CIBIL issue. Whats the reason
Kunnath Santosh answers, CIBIL keeps a financial record of all individuals in India. In case you have earlier defaulted on any of your EMI, credit card payments or you have had cheque bounces, you credit score will be low. Cos issue card to people with good scores and clean history of payments.

asin asked, Hi Kunnath, I noticed last week that 6 months back there was a late payment penalty of Rs 1000 in my card statement.. check cleared took time.. can that money be reverted
Kunnath Santosh answers, Yes, if you can speak your way through the company you can get this charge reversed. I had a similar issue once and I was able to get it done. But considering 6 mths have gone, they may not do it. Highlight them your regular payment history and ask for a waiver.

sreeja asked, what is the best way to avoid credit card debt?
Kunnath Santosh answers, Best way to avoid credit card debt: 1) Take credit limit only that you need and can afford. 2) Surrender additional credit cards if you have more then one and are not able to control the same. At the end of the if you are not a disciplined spender, just avoid using credit cards.

chandru asked, Hi Santhosh, I have 9 Credit cards. I bought one for Petrol, one utility payments, one of Balance transfer.... is it right way to have this much cards? what about co-branded cards?
Kunnath Santosh answers, You have to be really disciplined to use 9 credits cards. Personally I am not in favour of such extensive use of credits cards, there will always be a better card available in the market and that does not mean we buy another one. Just to make myself clear, you cant have 5 cell phones coz the new one is better. Replace and use the cards that you really need to avoid future problems with debt.

vivek asked, i dnt get credit card 'coz of some CIBIL issue. Whats the reason
Kunnath Santosh answers, As I said earlier, CIBIL keep a history of your financial transactions. You must have had some bad credit history bcoz of which cos are rejecting you a CC.

Sheela asked, Hello sir, I just started on my job. Many companies are offering me credit cards. But my elder brother tells me that it is any day better not to have a credit card. Is not having a card at all the right thing to do? Please help me out. Thank You
Kunnath Santosh answers, If you are a disciplined user credit card is a good product to have. It gives you lots of flexibility for usage, free interest period. But make sure that you always pay you credit card dues in full, do not enter credit card details in all sort of places and do no take a card with limit higher then what you need.

sundeep asked, Can a loan be taken on the credit card?
Kunnath Santosh answers, You cannot take a loan on a credit card as such. But yes many times we do get call from the CC companies also offering us a loan.

IMGAY asked, Can i transfer payment of one credit card to other card. and can i keep doing this with 3-4 credit cards for a long time without paying. Only in exceptional basis.
Kunnath Santosh answers, First of all there are limits to the amount of money you can transfer without being charged any amount. Second the whole process takes time, therefore needs to be initiated well before the due date. Apart from this you cannot continue with such an exercise after one transfer in most cases.

san asked, pls tell me what is the best method to maintain a good credit performance in credit card usage.
Kunnath Santosh answers, A good credit performance in a credit card can be done by ensuring that you make the complete payment before the due date. making minimum amount due will not help your credit history.

navvi asked, Sir, how the enhance the limit of the credit card?
Kunnath Santosh answers, Make sure you make your payments regularly to your credit card co. After a period of 3-6 mths depending from co. to co. you can request for a limit enhancement. But you should ensure that your payments are in full and are on time.

shiva asked, Hello, By having more credit cards, does our credit rating maintained by CBIL hit a lower score? And what are the implications of taking loans from Credit cards which offer personal loans at a much lower interest rates than the market? Do the Credit card vendors add an entry into CBIL at the time of issuing a loan against your card taking anther hit on your CBIL score?
Kunnath Santosh answers, Taking too many credit cards in itself does not reduce your CIBIL score, but for a prospective lender increase the risk of giving a loan to a person who is already highly leveraged.

nis asked, i am a very high usage customer of my CC. my avg monthly bill is around 2 lacs per month. is there a specific type of card which may give me more benefits with this high usage?
Kunnath Santosh answers, Yes, there would be many such card. Try and look for cards which give you reward points for usage and where you rewards points do not expire on non-usage.

j9 asked, SCB regularly offeres to convert my card outstanding to EMI is that a good option?
Kunnath Santosh answers, I would typically avoid such options if I have the money. Take such options only if you understand all the terms and conditions, it is interest free and you are disciplined enough to make all the EMI payments on time.

Siva asked, Can you brief about how the interest (whether monthly/daily, what percentage) is applied on the credit card spends?
Kunnath Santosh answers, On the unpaid amount of your credit card balance you are typically charged anything between 2.5%-3.00% p.a. That would be a annual rate of almost 36%, over and above this there may also be other penalty charges.

ST asked, my bank keeps rejecting my credit card upgrade request from Gold to Platinum, but does not give reason why. What could be reason.
Kunnath Santosh answers, Your upgrade may be stalled for various reasons. Some of them could be as below: 1) your credit history 2) bank has other requirements before its give you such cards, like making investments through them etc. 3) bank may be going slow on its credit card biz,

vu1 asked, Sir, I have had a very bad experience with one CC during 2000-01. After that I have availed another credit card and am using it cautiously since 2004 without any problem. However,I recently came to know that the first CC has put me in Satyam list. This is known through another CC company which offered me a card and then rejected. What am I supposed to do in this case. Pl. suggest
Kunnath Santosh answers, Ensure that all your dues with the earlier CC are closed and make sure you take from them a no due certificate. If that is still pending it may continue to reflect in your credit history.

hemanth asked, wat bank would be the best choice with free annual fee.
Kunnath Santosh answers, there are many banks both in pvt sector and public sector that are offering cards without charing a annual fee. In most cases if you are already an existing bank customer, you should get them easily.

rana asked, hi wanted to ask is it ok to have auto debit for the credit card, waht whould you recomend
Kunnath Santosh answers, I would avoid giving auto debit for credit cards. Personally I like to look at my bills bfore clearing them. Like in restaurants so many times its happens that something that you have not spent on comes on your bill.

sshetty asked, on what criteria is credit card issued ? My gross is 85000 pm and I got a credit card for 20,000 even though i applied for a platinum one. This is the first time i applied for a credit card
Kunnath Santosh answers, The criteria's vary from co. to co and also for the type of cards being issued. Generally banks do not give platinum cards right away, rather they give such cards after seeing some regular usage by the customer.

ST asked, I applied for kotak Trump Gold Card. It gives 10% cash back on dining & movies. But their rep says no longer available. Though it is advertised on their website.
Kunnath Santosh answers, I am not aware of this specific case.It would be that they are making it available only to existing bank customers, do check on that.

rajshekar asked, hello i'm planing to take credit, so tell me how to use it
Kunnath Santosh answers, use credit cards only in authorised stored and websites. keep your usage atleast 25-30% below your available limit, so that you have some emergency limit available. pay the credit card due in full (and not minimum amount) and before due date.

Ravi asked, Hi Should one withdraw cash using credit card and if so is it wise to do so
Kunnath Santosh answers, Avoid withdrawing cash from your credit card, as it is very expensive.

samoldeep asked, How Credit Card company reports any bad remark to CIBIL without customer's consent
Kunnath Santosh answers, All financial institutions (bank, credit card cos) are suppose to provide info on defaulters to CIBIL. This is to ensure that there is nationwide network and data available on defaulters.

Zoom asked, Is it advisable to have more than two credit cards?
Kunnath Santosh answers, Take additional card only if you need it for a specific purpose that is not fullfilled by ur existing cards. In case your new card makes your existing card redundant, surrender it and make sure you collect a no due certificate from the co.

Karthi asked, is it safe to do online transactions using credit cards?
Kunnath Santosh answers, Yes, it is safe to do online transactions using credit cards. But make sure you use cards only in authentic websites with proper security approvals. Now a days all card companies after entering the data ask for a password as well as an additional security measure.

dsenthilk asked, I have a considerable amount as Fixed deposits. Can i get a Credit card against these FD at a very low rate of intrest. i normally do not rollover credit but sometimes rollover large payments like airline tickets or a Holiday payment only
Kunnath Santosh answers, No you cannot get a lower rate bcoz you have a deposit with a bank. Also not paying the credit card dues in full, can lower you credit score for future credit requirements.

Hiten asked, Hi, I want to increase my crdit limit...How can I do that??
Kunnath Santosh answers, pay you credit card dues regularly and in full, after a period of 3-6 mths you can request your cc co. to increase ur credit limit.

vineet kansal asked, Hi sir, I am a salaried person so mostly i try to pay my credit card dues from my bank account but at times my credit card is used by my close relatives for air tickets and in return they give me cash. Is it safe to pay your dues in cash and whether such transactions will be questionable by income tax or not in future. I am very disciplined in using my credit card.
Kunnath Santosh answers, If you are collecting cash from your relatives, you should be able to prove the same. Or else it can bcom a issue if the cash amount involved are high.

sandip asked, i have taken hsbc credit card last 4 yrs back . at that time they have give me bill of 4500/- when i asked it should be 2900 they said ok we will give you this in next month but paid 2900 so i paid & same was written on back of cheque. after that i have not recd. bill .now they have sent me 22000 rs bill though the validity is expired. pl. let me know what to do
Kunnath Santosh answers, Write to them explaining the complete case and take an seal on the same. If you feel you are right you can take the case to the banking ombudsman of your region or else you can ask the bank for a settlement. Apart from this always make sure that you have written proof of communication with the cc companies. Always take a no due certificate on surrendering a cc.

keshant asked, I had a settlement of my SBI credit card long back but they have given my name in CIBIL. is it right and can i chalenge this? How can i get my name removed from CIBIL
Kunnath Santosh answers, SBI had done the right thing and you cannot challenge that. CIBIL keeps record of all individuals and not only the defaulters. To ensure that your score improves: ensure you make all your payments on credit cards on time no cheques of your are bounce EMI payments are made on time if you do this regularly you score will improve.

satyendra asked, Sir, How do credit card issuing companies or banks makes profit from credit card customers if the customer is paying all his or her dues before the due date?
Kunnath Santosh answers, Credit card companies hope that on an average some people wont pay on time and since they charge such hefty rates they earn from the same. Credit card companies also have deals with vendors, etc to make money.

tina asked, is it a good idea to have multiple credit cards, my friends say if used smartly it saves a lot
Kunnath Santosh answers, Yes, use smartly and in a discplined manner. Dont do it bcoz your frends are doing it, do it only if you also have the same kind of discipline.

vineet kansal asked, Hi Sir, Also request you to enlighten me with the rewards point it can be used
Kunnath Santosh answers, Lets say I have credit card jointly branded with a airline co. The points that I accumulate can be used against buying airline tickets. Such like there are many options of using the credit card points.

ishan asked, Sir, I am using credit card since 2 yrs.Last month credit card issuer had offered me to change my regular card to gold card as i am a disciplinary payer of card bill every month.I had confirmed them to change my regular card in to gold card.But i have got statement containing additional charges of Rs.1000 as converting regular card in to gold card.Pls suggest me how to get reversed this additional charges ?
Kunnath Santosh answers, If this was not informed to you while telling you about the card, you can tell them co. that I would surrender the card if the charge is not reversed this should be enough for them to reverse the charges. Make sure communication with the co. is always in written form to have proofs later.

chinni asked, I came to knowt hat there are many card which will provide the life insurance. So i opt asmany asap. do u thinnk this is good?
Kunnath Santosh answers, I would not take a credit card bcoz it is giving life insurance. I would rather take a credit card which is beneficial bcoz of its primary functions that is providing credit. insurance should be taken separately to ensure that you are properly covered even if you no longer have the cc.

Kunnath Santosh says, Thanks everyone for logging in, I am sorry would be able to answer only these many queries today. For more queries write to

Kunnath Santosh says, Use your credit card in a disciplined manner and if you think you are the one with a free hand...avoid cc's. Thanks.



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