Have you been thinking of reducing credit card bills month on month? Here is my version of the story on extracting the best value out of credit card by optimized and responsible usage. My expenditure on credit card was increasing steadily and this made me to sit down and understand what was happening. I wasn’t spending on un-necessary things for sure. But still every month, my bill used to be high and it was certainly a major instrument of out flow. So, it was obvious for me to understand and cut short on not-so required stuff… recession times you see!
Analysis has to start somewhere and I started by looking at the credit card statement for a couple of previous months. The break up of the statement showed that the spending was massive at shopping malls like Big Bazaar and Food World compared to expenditure on others. Ofcourse the *others* section included petrol bills, online bill payment towards electricity, telephone, mobile and life insurance premiums apart from occasional eat outs. Soon after that break up the root cause was analyzed and fixed it. Now since past two months, my credit card expenditure has gone down considerably.
I am listing down few tips from my analysis:
- Be cautious on what you want to shop in shopping malls.
- Don’t go to shopping malls without a list of things that you plan to purchase and stick to list.
- Even if you find something at a mall which is not in your list, think twice!
- Learn to differentiate between what is required against what is available.
- You get many items which are of better or same quality out side malls for much lesser price. Preferably a small store next to your home could be a better place when it comes to groceries and toiletries. Advantage here is that you pay through cash! which means, you know your limits on expenditure.
- Use credit card to pay your monthly bills online – Since these bills are unavoidable, if you plan well, you have 45 days of interest free money!
- Use credit card only when the situation demand is a must.
- Never ever draw cash from your credit card.
- It is good to have a credit card for unforeseen expenses which tickle us at times!
Believe it or not my credit card statement now shows much lesser amount being spent through credit card. I am sure there might be many other ways to use credit cards more effectively. Feel free to add your tip/suggestion. Also, you may be interested in reading my experiences at Big Bazaar and Food World shopping malls.
Dallan says
Nice article. From my personal experience i would suggest if we completely forget about credit card. Purchasing through credit card just grows on you and its like an addiction. Then after some while you realize you are helpless. provides lot of details and things we never knew about credit card and its charges.Hope to see more of your posts!
Dallan says
Nice article. From my personal experience i would suggest if we completely forget about credit card. Purchasing through credit card just grows on you and its like an addiction. Then after some while you realize you are helpless. provides lot of details and things we never knew about credit card and its charges.Hope to see more of your posts!
umesh derebail says
Credit card in emergencies is a great boon, suppose one has to attend a funeral, to purchase an airticket in the midnight i have used credit card, secondly for my marriage i was running short of cash i drew cash, and had to pay an interest of 2.5% a month a whopping 30%, but once a lifetime affair. Lolz good article, lastly credit card statements can help you in legal evidence preserve it.
umesh derebail says
Credit card in emergencies is a great boon, suppose one has to attend a funeral, to purchase an airticket in the midnight i have used credit card, secondly for my marriage i was running short of cash i drew cash, and had to pay an interest of 2.5% a month a whopping 30%, but once a lifetime affair. Lolz good article, lastly credit card statements can help you in legal evidence preserve it.
S.R.Ayyangar says
Very good tips for shopping tipplers. You would be surprised to know that as long as I was in Bank, never had a credit card. Its only now that I have a debit card!
Mohan says
Sure I have a lot of things to learn from you! It would be great if you could share your life time experience on banking related things with us 🙂 Time for another guest post?
Lazy Pineapple says
A great article Mohan…very practical tips. I for one hate credit cards and I don’t have one. I feel that most people fall prey to over spending and then repent.
Though they are useful in times of need…I still feel a debit card suffices and helps you curb your spending.
Mohan says
Good for you. Well, I feel it is good to have one – but know when to use 🙂 you never know the unforeseen situations in life!
Nishant Singh says
Credit Cards are highly useful financial tools if you use them right. One thing you rightly pointed out is the use 45-days of interest free period which is crucial for anybody to know about and how they can use this to their advantage!
Also, I see a lot of people going in for Gold and Platinum cards but they forget that such cards are also expensive to keep as their annual charges are higher and sometimes they have a higher interest rate as well!
Credit Cards are excellent for online purchases from India or abroad, paying bill, booking tickets etc. But they are NOT an alternative to CASH transactions!
Mohan says
Well, I have been using platinum card for over 5 years now.. and it is free of cost! Not all cards have annual fee, just bargain while opting for one. Life would be much more happier!
Lakshmi says
Also, try using cash when you can. Hits you hard that you are spending money:P.
You withdrew 1000 Rs just last week, where did it disappear?:), and of course can be harder to part with actual cash rather than electronic transactions?
Mohan says
Somehow i am getting used to electronic transactions in the past few years. Though I make conscious decisions on when to use, it feels so convenient to use online mode for utility bill payments!
Krishna Chaitanya says
The retailers and banks would not be happy with this post. 🙂
Mohan says
Can’t help Krishna! There is always another side of any damn thing in our lives!
Mohan says
@Shrinidhi Hande
Yeah.. I read that. Good composition of various aspect..
Shrinidhi Hande says
My post is finally here http://www.enidhi.net/2009/04/credit-card-usage-best-practices.html
Thanks
Radhika says
Agree with you ! Even my expenses have increased a lot ; will have to do some introspection !
My tip –
Please know every detail of your card. for example – If you hold a master card then you can pay in sites that require you to pay in say USD or any other currency other than INR. If your card does not support it you might have to pay a heavy surcharge on the purchase (for inter currency trans) !
Radhika says
Agree with you ! Even my expenses have increased a lot ; will have to do some introspection !
My tip –
Please know every detail of your card. for example – If you hold a master card then you can pay in sites that require you to pay in say USD or any other currency other than INR. If your card does not support it you might have to pay a heavy surcharge on the purchase (for inter currency trans) !
Rajesh says
Utmost care is required to use the credit cards
good one.
Ruchi says
I agree with this point “Use credit card only when the situation demand is a must”, otherwise i am against credit card use.
Sujata says
easier said than done though Mohan…it is so easy not to think of money when we use a CC!
🙂
Sujata says
easier said than done though Mohan…it is so easy not to think of money when we use a CC!
🙂
Shwet Prabhat says
The simple thing to differentiate between “required against what is available” is to use cash when in malls. And you see old man say ” Their is enough to fulfill every man’s need, not enough to fulfill one man’s greed :)”
Mohan says
@Jennifer Kumar
thanks for you thoughts. Yes, I have experienced the similar results in my 4 months test period 🙂
@Manjunath
I haven’t used any credit card apart from CITI. I have no clue on SBI here!
@Shrinidhi Hande
Look forward for it.
Mohan says
@Jennifer Kumar
thanks for you thoughts. Yes, I have experienced the similar results in my 4 months test period 🙂
@Manjunath
I haven’t used any credit card apart from CITI. I have no clue on SBI here!
@Shrinidhi Hande
Look forward for it.
Shrinidhi Hande says
I’ve my own set of observations and suggestions- planning a new post on it.
Manjunath says
More than “Responsible use of credit card” it is better to use “Responsible credit cards” i had very much bad experience regarding the service offered by some Credit card Companies especially Notorious SBI Credit card who loot people with hidden charges…. Now i am using my ICICI Visa Powered Debit card for most of my shopping transactions and very rarely my ICICI Credit card if at all i run out of balance…
Manjunath says
More than “Responsible use of credit card” it is better to use “Responsible credit cards” i had very much bad experience regarding the service offered by some Credit card Companies especially Notorious SBI Credit card who loot people with hidden charges…. Now i am using my ICICI Visa Powered Debit card for most of my shopping transactions and very rarely my ICICI Credit card if at all i run out of balance…
Jennifer Kumar says
Mohan, A great article with practical tips for anyone! Problems of credit cards are the same world over! 🙂 I have a few tips. One, is keep detailed account on certian expenditures. I have been keeping accounts on grocery bills for past three years. Believe it or not for Jan – March this year, I spent almost 1/2 what I did in same period ,2007, and… Read More 2008! It’s all because I see it in black and white!
I am not sure if creditors do this in India, but here in US last year, I got a cash advance with 0%. I put this money in my savings account and gained about $250 interest. Doing this, though one must look into fine print, such as transaction fee for cash advance (the fee for advance should be lots less than the interest you will earn in same period), pay back regularly on a monthly basis the lowest required amount, pay back total before 0% expires and when taking the advance make sure previous balances are cleared and don’t incur any other fees/charges once the balance transfer is taken..
There will more details in the fine print of course, terms vary depending on credit card company!
Jennifer Kumar says
Mohan, A great article with practical tips for anyone! Problems of credit cards are the same world over! 🙂 I have a few tips. One, is keep detailed account on certian expenditures. I have been keeping accounts on grocery bills for past three years. Believe it or not for Jan – March this year, I spent almost 1/2 what I did in same period ,2007, and… Read More 2008! It’s all because I see it in black and white!
I am not sure if creditors do this in India, but here in US last year, I got a cash advance with 0%. I put this money in my savings account and gained about $250 interest. Doing this, though one must look into fine print, such as transaction fee for cash advance (the fee for advance should be lots less than the interest you will earn in same period), pay back regularly on a monthly basis the lowest required amount, pay back total before 0% expires and when taking the advance make sure previous balances are cleared and don’t incur any other fees/charges once the balance transfer is taken..
There will more details in the fine print of course, terms vary depending on credit card company!