3 Ways To Boost The Power Of Plastic Money

The power of plastic money, which effectively promotes the ‘buy now, pay later’ policy, has become a modern-day convenience, but the global history of the earliest credit cards dates back to the early 1900s. You must have read or seen this in books or movies depicting a society where a local general store would extend credit to regular customers while department stores in the cities would do the same. Although we have come a long way from local general stores to online shopping, one thing that has not changed is the use of credit.

With the e-commerce and the retail industry growing at a frenetic pace, credit cards won’t be disappearing anytime soon. According to a Reserve Bank of India (RBI) report published in February 2014, there are nearly 19 million credit cards in circulation. Also, digital payments in India are expected to touch Rs 1.2 trillion by December 2014, a 40% increase from Rs 85,800 crore the previous year, propelled by the growing Internet penetration, growth in e-commerce and the ease of online payments, according to a report by the Internet and Mobile Association of India (IAMAI).

The benefits of a credit card include the ease of carrying, better security and protection, compared to cash. Increasing your purchasing power, brining in value-added benefits like cashback and reward points, and ensuring emergency protection are some of the benefits that one can easily avail through credit cards.

Here are 3 quick ways to maximise these benefits.

1. Go for the long run: Become a long-term customer and make sure of reasonably frequent usage of the credit card. If the credit card usage shows good credit behaviour over a long period of time, it will impact your credit score positively. Also, your chance of getting a loan, even a larger loan, from lenders becomes brighter.

2. Bridge that extra mile: It is a good practice to utilise maximum of your credit limit towards the beginning of your credit cycle. Suppose your billing cycle starts from the 10th of each month. In such a case, try to make maximum use of your card closer to that date, which means around or after the 10th of that month. The more you use your card closer to the 10th, the maximum free credit you get.

3. Watch out for the speed breakers: Try to avoid minimum payments on your outstanding amount. It is advisable to pay 100% of your credit card bills if that is possible. Stay disciplined and pay on time all the outstanding dues as this reflects good credit behaviour, which in turn also impacts your credit score positively.

As one of the classic ad campaign says, “There are some things money can’t buy. For everything else, there’s MasterCard.” So use your credit card prudently, always pay the full outstanding amount on or before the due date and be cautious not to leverage the power of plastic beyond your means.

Watch this space for the concluding part for the article – Fee For A Credit Report Versus Free Credit Report.

About the author: Satish Mehta is the Founder and Director of Credexpert, a credit and debt counselling company in India.