credit cards

Best Credit Card that Suits Your Needs

by Vinaya HS on June 26, 2016

in Finance

The following post is a sponsored post.

Most users have a very basic understanding of credit cards and how they work. To most users, these cards simply represent a line of credit, albeit one that attracts interest. This however, isn’t entirely true. While all credit cards allow you to make instant purchases without needing to make simultaneous payments, there are differences in the repayment structure, interest, fees, and also in benefits offered.

There is a wide range of choice when it comes to credit cards and many banks also offer repayment options with a specific interest-free period. It is important to keep your expectations in check while researching the different options to find the perfect card that meets your requirements. To find a card that suits your needs, it is recommended that you ask yourself a few questions.

How often will the card be used?

Do you believe that ‘cash is king’ or will you be using the card for all your requirements, such as fuel, groceries, bill payments, and everything else. No matter what your usage, the best credit cards will most likely be those that require no annual fees. However, if you plan to use the card for all your purchases, you can convert these to vouchers or other offers with a rewards program.

How much balance will be repaid every month?

It is absolutely essential for you to be very realistic about this consideration when you apply for a credit card. If the answer is the minimum due amount, you should find a card with low-interest rates to save money. On the other hand, if you are going to pay the bill in full each month, the rate of interest will not be too much of a concern and you can opt for a card with other benefits and features. This consideration is even more crucial than the presence of an annual fee.

Do you have any outstanding amounts on other cards?

If you already have a huge outstanding on your card, you should consider the type of credit cards known as balance transfer cards. Very often, these cards give you the option to convert the outstanding to equated monthly installments that reduce the carrying cost on the owed amount.

However, while opting for such a card, it is important for users to be aware of the rates. Card issuers may provide the lower interest rate only on new purchases made, which does not address the existing outstanding balance issue. Conversely, the low balance transfer rate may not be applicable to new purchases.

Are you a frequent traveler?

For frequent travelers, it makes sense to look for cards that offer travel rewards. These cards award reward points on your travel and airline expenses, which can be redeemed for free air miles or stays at participating hotels. However, do not be influenced by the sign-up bonus, but be more attentive towards the long-term perks and rates that are more valuable to you.

A secured credit card, when chosen and used responsibly has several benefits. All banks including Kotak Bank offer different kinds of cards to suit the varied needs of their customers. A few of their offerings are listed below:

Shopping – Urbane Gold, , Silk Inspire (Specially designed for women), and Essentia Platinum

Lifestyle – League Platinum, Wealth Management Infinite, Privy League Signature, and Royale Signature

Dining/Entertainment – PVR Platinum, PVR Gold, and Delight Platinum

Non Resident Indians – NRI Royale Signature

Just as you would hunt around for the best bargain when shopping for major purchases, the same care should be taken when applying for a credit card. If you believe that you can use a credit card in a responsible manner that benefits and helps you save money, you should consider signing up for one of these cards at the earliest.

Author Bio:
Tejas Kunder is an independent blogger and writing has been his passion for a long time. A journalism grad, he loves exploring the world of sports, health, lifestyle and travel. When he’s not writing, he’s out on his bike discovering new places, apart from that he loves listening to music and catching up on the latest flick.

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Here’s something that I found in my Inbox over the weekend (emphasis mine) –

I am writing to you on behalf of Standard Chartered Bank to explore an opportunity to review its latest offering — instant online Credit Card approval solution. Please find below details for the same.

Standard Chartered Bank, India’s largest international bank has gone digital, launching India’s first instant online Credit Card approval solution, which will enable a customer to apply for a card online and receive an ‘Approval In Principle’ (AIP) almost instantly.

With the digital application process, the customer can apply for a credit card online at his or her convenience. From a customer-friendly dedicated internet page accessible directly or through their website https://apply.standardchartered.co.in/credit-card, the customer can browse through various options available and apply for his or her preferred card.

The online application process involves verification of key customer details such as the Permanent Account Number, mobile number, email ID and credit history through CIBIL, and other internal eligibility criteria.

The AIP will be followed by a final approval after completion of ‘Know Your Customer’ and credit approval processes.

I have also attached more details about AIP for your reference. We thought this might be useful for you and also the readers on your blog. Do you need more information please feel free to contact me.

Download Icon
Click here to download the PowerPoint explaining the whole process in greater detail. This was attached by the marketing agency with the above email.

Here’s what makes me happy –

  • I really like the concept. It’s a pretty straightforward way of connecting data about you and using it. No more filling-up forms and then twiddling your thumbs or plucking rose petals chanting “will they give me a credit card or will they not give me a credit card.” I recount my experience and fight with Kotak when I’d applied for one of their credit cards and was rejected.

But more important, here’s what makes me nervous –

  • Approval also depends on vaguely termed “other internal eligibility criteria.” What exactly does that mean? Why not be transparent and specific about what those criteria are? My credit card application with Kotak was rejected for precisely the same other internal eligibility criteria. They never told me what that was. The exact words used were “other reasons.” I got frustrated and told them to keep their cards with themselves. Immediately after that, my credit card application with Standard Chartered Bank was approved. So go figure!

Address this one shortcoming (when you’re setting a precedent you might as well go the whole way) and I think we’ll have a true winner.

What do you think?

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Quietly tucked away at the bottom of my credit card statement was this Cash Back offer from HDFC Bank on their credit cards.

Click to enlarge the image

I opted for the 1.5% cash back on Apparel and Department Store purchases. Having read the terms and conditions, I think this cash back in on top of any reward points earned (I currently get no cash back but earn reward points for all spends). Thought this would be useful if you do have a HDFC Bank Credit Card and are currently earning no cash back or want to switch to a different cash back program based on your purchasing trends.

Note: I will announce the winners of the March book giveaway along with my review of the book on Monday morning. Got delayed a bit due to unforeseen work at work.

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From the Credit Card Terms sheet:

How we apply payments?

We may (but need not) apply payments we receive to pay:

  • fees, charges and interest shown on any statement; then

  • any cash balance shown on the statement; then

  • any other balance shown on the statement; then

  • any cash transaction not shown on the statement; then

  • other transactions on the account not shown on the statement

Not any different from how it’s done for HDFC’s Platinum Credit Card. One late payment or one cash withdrawal on your credit card and you’re milked to the extent possible.

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My First Credit Card Experience

by Vinaya HS on October 11, 2011

in Finance

My first tryst with a credit card was about twelve or thirteen years back. My elder sister had just started work at a local software firm where her salary was directly credited into an HSBC Savings Account. Not too later, HSBC offered her a Silver Credit Card with a grand credit limit of Rs 20,000. For some reason, my sister thought that I’d be much better at managing the credit card bills and therefore assigned that task to me.

The first bill came. The minimum payment due indicated was Rs 100. I promptly got my sister to sign a check for Rs 100 and dropped it at the nearest check collection drop box. Happy as you can be.

The second bill came. Late payment fee, interest charges, etc. appeared on the statement.

Wow! Wait a minute! I didn’t know that. So that’s how credit cards work.

Somehow I forgot that lesson because a couple of years later after I started work, I ended up with an outstanding credit balance in six-figures on an American Express credit card and no bank balance to pay it off. Lessons learned the hard way. That’s also why you’ll find a good number of articles on credit cards in the archives.

Today, I have three credit cards that I mainly use when traveling and occasionally for other odds and ends. I still don’t carry a credit card in my wallet. Reward points and cash backs don’t tempt me. I flatly refuse all EMI-conversion options. In fact, one of my credit cards automatically hiked-up my credit limit looking at my spotless payment track record.

A far cry from those days when I couldn’t sleep just thinking about how I’d pay the credit card bills. But I still don’t know why Kotak Mahindra rejected my card application for “other reasons.” Who cares!

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There’s a general rule of thumb for financial products that you should run away from:

“The fancier the product verbiage used in its marketing literature, the faster you should run away from it.”

Let me ask you a question.

IDBI_Bank_Magic_Card_Rounded_Corner
What’s the first thought that comes to your mind when you see a big bold ad for “IDBI Bank Magic Card” in the morning paper? As soon as I saw the ad, my mind started to scream “this definitely has to be magic at your expense.”

And indeed it turns out to be one. Here’s why (emphasis mine):

(From the product flyer — the first danger sign.)

A first-ever debit card with a credit limit that charges you much less than a regular credit card. It supports your salary account. Allows you to spend you salary and then some more. A card that believes in stretching its limits so that your salaries never end.

(From the product FAQ — more danger signs.)

What is IDBI Bank Magic Card?

IDBI Bank Magic Card is a Debit Card with inbuilt credit facility. Magic Card allows the cardholders to spend on the card even there are no funds available in their Savings Bank account.

How the interest will be recovered on the utilized amount?

Such interest (together with the principal outstanding) would be recovered from the salary credited to the customer’s account.

See where the magic’s happening?

Salary credited into your account. Card balance debited from that account. Poof! Magic! There you go! Your hard-earned money magically disappeared even before you realized it.

QED.

Need I say more?

Yep. A couple of closing thoughts — why you should not own a credit card from a bank where you have other deposits and the order in which your credit card payments are applied while settling dues.

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Tweets on 2011-06-30

by Vinaya HS on June 30, 2011

in Finance

From the “Important Information Document” bundled along with the Manhattan Platinum Credit Card application:

Death and Insolvency of a Cardholder: The entire outstanding dues in the Card account shall become payable in full by your successors or assignees in the event of your death or insolvency or winding of your business.

Credit APR = 37.20%

Cash APR = 41.88%

I doubt if the “death and insolvency” condition is even legal. Unless you personally guarantee something by putting down your signature, how on Earth can you be implicitly held responsible for paying someone else’s unsecured debt?

The interest rates are closer to “extortion,” but the Card Issuer (Standard Chartered Bank) claims that these are special rates on offer. Makes me wonder what their non-special rates are!

The only good thing about this credit card is that it self-destructs (i.e. becomes invalid) automatically unless you choose to explicitly renew it after a year (by paying an annual fee of Rs 999).

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Recently, D and I made two major purchases for our home. On both occasions, we paid for the respective purchases in cash. On both occasions, however, I could have made the choice to use my credit card.

On the first purchase, I would have earned 250 reward points.

On the second purchase, I would have earned 380 reward points.

On the first purchase, I would have also earned Rs 400 in cash-back (the store had a cash-back scheme if you used XXXX Bank’s credit card and I happen to have one).

But, on both occasions, I chose not to.

For me, 630 reward points and Rs 400 in cash-back aren’t worth carrying a 6-figure liability (the credit limit set on my credit card) in my wallet each day. Sure, I could have slipped the credit card into my wallet on the day of purchase, but I’d also have to remember to take out the credit card upon returning home. Now, how many among us actually look inside our wallets each morning? You wake up and you rush to work. Taking out the credit card from you wallet is the least of your worries each morning.

And yes, you could argue in favor of the Card Protection Plan. But why would you ever want to pay someone each year just so that you can have peace of mind when you’re spending money that’s not even yours to begin with? To me, that’s the wrong peace of mind. Credit Card. Credit Card Protection. What next?

In my opinion, a credit card in your wallet is akin to a time-bomb waiting to diffuse. Plus with lost-card liability policies generally being in favor of the card issuer, your problems only compound. It’s not that I abhor credit card usage. I do use my credit card — but only when there are absolutely no other means to pay for that transaction. Even then, I first ensure that there’s cash in my savings account to settle the bill — in full.

What do you think?

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@ 08.05 AM:

From: TD-TXNALERT

Thank you for using your XXXX Bank Credit Card for YYY.ZZ in ACQUIRER OPERATIONS @ 10-Mar-2011 08:02 AM.

Now, I don’t carry my credit cards in my wallet. My credit cards don’t charge an annual fee. So where did this SMS come from? I was all ready for a fight with the Bank when I happened to see this email:

We’ve delivered your purchase.

Thanks for making your purchase through Skype. We’re happy to confirm your payment. There won’t be any break in service — your new purchase will pick up right where the old one left off…

The recurring payment for your subscription will be charged on the same date (or as close as possible) on each billing period. If you cancel your subscription it will take effect at the end of the last billed period.

There you go — an online recurring payment on my credit card! How dumb of me?

When I was traveling recently on work, I’d purchased an India-calling package from Skype. Upon coming back, I forgot to cancel my subscription and at the end of the first subscription window, Skype happily charged a second subscription to my credit card details that they had on record. Now I have an India-calling package when I reside right here in India. How really dumb of me!

A valuable lesson learned.

Skype no longer has my credit card data on their records. As for that subscription pack, I have 3-months to go before it expires. Maybe I should exhaust it by calling D Bangalore-to-Bangalore!

Goes to show how dangerous credit cards can be.

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How to Subscribe to Capital Advisor?

by Vinaya HS on February 1, 2011

in Finance

A quick reminder.

If you’ve been reading Capital Advisor directly on the web by visiting its homepage, you might want to automatically keep up-to-date with Capital Advisor through one or more of the following channels:

So go ahead and subscribe to the option that’s convenient for you.

I’ve also been browsing through the archives digging up articles of note. Some of these are timeless and hold good to this day. Others reflect my thoughts and experiences at that point in time but which have now changed. Thought it’d be good to bring these up as refreshers.

One-year back on Capital Advisor

Be careful who you act as a reference for. The advise in here is timeless. Since then, I’ve heard from D that one of her closest relatives suffered a serious financial setback since he’d guaranteed someone’s liabilities.

Two-years back on Capital Advisor

Personal finance products that must be avoided. Though the absolute number of such toxic financial products has reduced a bit, they’re still around sometimes under different names. You’d best learn to recognize them and to avoid them.

A strategy for using credit cards for emergencies. By the end of this year, my emergency fund will be equal to the credit limit I have on my credit cards. I can then safely use my credit cards in case of emergencies.

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Telemarketer. Peddling an SBI Credit Card. Rs 800 in coupons (God alone knows for what) along with the credit card. A Rs 500 charge upon first usage. Seems they’re very upfront about disclosing these charges. I almost asked how much those coupons cost SBI to begin with.

What a scam!

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From HSBC:

You continue to enjoy a reduced interest rate of 3.25% p.m. (39% p.a.) on extended credit on your HSBC Credit Card ending XXXX.

I’ve had this card since 5+ years and have never made a late payment. If my interest rate for being loyal and punctual is 39% p.a., you can imagine what the interest rate would be for someone who has made late payments.

To give credit, HSBC’s tried quite a number of tricks over the years to get me to convert my credit card balance into one of their lame EMI schemes. They don’t realize that I’m not their target market. If I was, we’d see this headline: “Personal Finance blogger converts credit card balance into EMIs.”

And then you’d stop reading this blog.

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Booking a SriLankan Airlines flight, billing amount in $, enter credit card information, successfully Verified by Visa, transaction rejected, call center says I need to authorize the website through Internet Banking.

What’s the whole point of being Verified by Visa?

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If you find yourself drowning in credit card debt and have no idea on how you’re ever going to repay all that debt, you can try the Dead on Last Payment technique. The method focuses on quick psychological wins — definitely what you need when you’re swamped with credit card debt.

Let me know if this method worked for you.

Tip Tuesdays is my initiative to share practical personal finance tips — every Tuesday. I’d be delighted if you could share a tip or two from your own experiences. Drop a comment to submit your tip. And, as always, do spread the word if you find this useful.

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A random thought had me rummaging through my credit card statements for arriving at this conclusion:

HDFC_Platinum_Plus_Credit_Card

The fuel surcharge is indeed zero, but you’re still paying the service tax! A good reminder for what I’ve said before: Always check for service tax charges.

Does your credit card do the same?

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Reader Gopal asks,

I can see my total credit card dues over the Internet. Can I pay off these dues even before I receive a statement from my bank?

Sure. You can. In fact, I follow this policy [and I'd advise you to] — each time I use my credit card, I wait for the transaction to get posted and pay it off immediately. My credit card statement has a Rs 0.00 due each month.

Tip Tuesdays is my initiative to share practical personal finance tips — every Tuesday. I’d be delighted if you could share a tip or two from your own experiences. Drop a comment to submit your tip. And, as always, do spread the word if you find this useful.

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Because,

The Payment Due Date is the last date by which the bank should receive clear funds post processing towards card payment, failing which, future transactions may not be honored and late payment charges and charges on revolving credit plus service tax will be levied as applicable.

Tip Tuesdays is my initiative to share practical personal finance tips — every Tuesday. I’d be delighted if you could share a tip or two from your own experiences. Drop a comment to submit your tip. And, as always, do spread the word if you find this useful.

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Because the bank has the right to dip into your savings and settle your credit card dues. An extract from HDFC Bank’s Most Important Terms & Conditions for Credit Cards (version 1.23) reads:

Right of Lien

The bank, at any time and without notice, will have lien and right to set-off all monies belonging to the Cardmember and/or add-on Cardmember standing to their credit in any account/custody of the bank, if upon demand by the bank, the balance amount on the card account is not repaid within the prescribed time.

Could be a sticky issue especially when you have any disputed and unresolved credit card transactions. To play it safe, it’s a good idea to avail a credit card from a bank where you don’t keep your other savings.

What do you think? What has been your experience in this matter?

Tip Tuesdays is my initiative to share practical personal finance tips — every Tuesday. I’d be delighted if you could share a tip or two from your own experiences. Drop a comment to submit your tip. And, as always, do spread the word if you find this useful.

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You might be wondering why your credit card dues simply keep spiraling out of control. The basic reason for this is that once you fall into the trap of not paying your outstanding dues in full, the bank levies all kinds of fees, interest, and finance charges and then tries to recover these before applying your payments towards settling actual transactions.

Credit card payments are first applied to all overdue amounts (the oldest due being credited first) in the following order:

  • Fees and other Charges
  • Interest
  • Balance Transfer Amount Billed (if applicable)
  • Cash Advances Billed
  • Retail Transactions Billed
  • Balance Transfer Amount Current (if applicable)
  • Cash Advances Current
  • Retail Transactions Current

No wonder then that your credit card dues simply do not end — it pushes you further and further into debt. And all it takes is one part payment (anything less than the total amount due) to set you on this downward spiral.

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Tweets on 2009-07-16

by Vinaya HS on July 16, 2009

in Finance

I’ve previously written about creating a real emergency fund with real cash before you use your credit card for emergencies. It so happens that I’ve had to plan for a personal trip towards the end of the year and which will require me to use my credit card (for accommodation, air tickets, etc.). The earlier strategy can be reused — create a real trip fund with real cash before using my credit card during the trip.

I think this strategy can be generalized for any credit card usage.

Create a real “purpose” fund with real cash before using the credit card for that “purpose.”

Peace of mind guaranteed. That’s what is missing in today’s world right? What do you think?

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