Play your cards right


Credit cards offer a lot more than just short-term credit and the ease of online payment

  • There are many people who use cards, but fail to tap the many benefits. A good starting point would be to go online and check the benefits available to them.

The credit card is by and large a convenience, used for payments when one doesn't have or want to carry cash. It can be used for shopping online, paying utility bills online, booking a bus, train or flight ticket, and so on. For a smart user, it is about getting free, well almost free, very short-term credit. Others pay enormous interest and use their entire credit limit.

But there are other benefits to this plastic money that can add up over time. Free miles. That is a word many know. By using the card not just for booking flight tickets, but also for shopping, one can get the benefit of free miles. Different cards calculate differently but, simply put, it is about one mile per rupee or two or three or ten. Generally air miles, these can either get one a free flight ticket of a participating airline, or even reduction in payment.

Mrinalini Ram is able to fly between Delhi and Chennai every quarter—sometimes even every two months—using the free miles that accumulate because her husband travels across the country for work, almost half a dozen times a month. Yes, these miles can be used by family members as well. Ritika Kapur, a college goer, carries a beautiful tote bag that she got in exchange for points accumulated on her card.

There may not be a card for every occasion, but many banks issuing these cards partner with organisations that have a specific kind of offer on spending. State Bank of India, for instance, has an IRCTC SBI card that comes with big benefits for those who travel a lot by train. Far from having to sit through a backbreaking journey from Kashmir to Kanyakumari, even a five-hour ride in the Shatabdi Express is enough to make a decent saving. As the mailer on it says, the “exclusive benefits” include 350 bonus reward points on spends of Rs 500 or more within 45 days of card issuance (Rs 500 is less than what an air-conditioned chair car journey of three hours costs), and up to 10 per cent value (of money spent) back as reward points when you buy tickets from While one may spend about 1.8 per cent as transaction charge when using other cards, this is waived when you use the IRCTC SBI card, and the 2.4 per cent fuel surcharge is waived across all petrol pumps in India.

The bank also has a card designed for those with “refined taste and exclusive lifestyle”. This offers, among others, a welcome e-gift voucher worth Rs5,000, Rs 6,000 worth of movie tickets a year, up to 50,000 bonus reward points on annual spend and access to airport lounges—complete with the delicious free food they offer—at 850 airports worldwide.

By using an ICICI credit card—or even a debit card—a customer can get cash back of Rs 1,500 on flight tickets booked through the MakeMyTrip app, or discounts at restaurants, shops and even hypermarkets like Bigbasket. So do cards offered by Axis Bank, Citibank or any other bank. In fact, most cards have similar discounts packaged differently, with different partners, and for rewards tailored to different users.

There are some utility services that charge a small percentage for payment by credit cards, but don't charge for payment by net-banking—something one should explore. And net-banking and debit card payments, too, come packed with paybacks and reward points, albeit on a lower scale.

The CEO of a company uses only credit cards to pay restaurant and hotel bills not because they are convenient or a status symbol, but because of the enormous discounts they get him. A professional woman says it is not a status symbol, but a smart thing to have. A lady with five different cards got Adidas Eau de Cologne, a Morphy Richards iron, fancy shaving blades, the entire range of Tupperware in her kitchen, a tank full of petrol, and cash back when she recharged her Tata Sky DTH service. All in less than a year.

Another customer got Rs 6,500 as cash back when she bought a refrigerator for Rs 7,000 using her credit card.

There are many people who use cards, but fail to tap the many benefits. A good starting point would be to go online and check the benefits available to them. It could well be a 25 per cent off at the restaurant that one has been wanting to take one's friends to.

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The Week

Topics : #finance | #banking

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