How to shop smart with your credit card?

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Updated: 03/10/2008 | 06:13 PM IST

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NDTV Correspondent

Friday, October 03, 2008 (New Delhi)

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It’s that time of the year when one can shop and splurge without guilt. Dussehra and Diwali merit all kind of shopping; new clothes for the wardrobe, new things for the home, gifts for family and friends, eating out and even new swanky cars and new homes.

This time if you have decided to do all your shopping on your credit cards, and not in cash, it is a good decision; because you can earn some really handsome bonus points.

So here’s how to shop smart with your credit card.

WHAT ARE BONUS POINTS?

They are points, a credit card company awards you for spending a certain amount using a credit card.

How to use bonus points?

Here’s what can you do with them:

# Redeem to buy something

# Use as air miles

# Exchange for gifts from the bank

# Exchange for cash

The best ones in the market

1. Card: ABN AMRO Smart Gold Card

# Rs. 25,000 spent means you earn: Rs 500

# Rs 50,000 spent means you earn: Rs 1,000

2. Card: SBI Visa Gold Card

# Rs. 25,000 spent means you earn: Rs 437

# Rs 50,000 spent means you earn: Rs 875

3. Card: HDFC Bank Gold Credit Card

# Rs. 25,000 spent means you earn: Rs 333

# Rs 50,000 spent means you earn: Rs 666

4. Card: Bank of Baroda BOBCARD Gold

# Rs. 25,000 spent means you earn: Rs 125

# Rs 50,000 spent means you earn: Rs 250

HOWEVER, DO NOT SPEND MORE THAN YOU CAN PAY.

Time to pay

# Pay on time: Pay well before the last date to avoid the huge interest charges.

Interest rate of 2.5-3.5 per cent PER MONTH on rolling over credit. That is a huge 30-40 per cent a year. A Rs 1 lakh bill will cost you Rs. 30,000 at least in interest only in a year.

# Pay the full amount: Interest may be levied on the whole amount even if just a few rupees are left to pay. These are the little tricks credit card companies love to use. If you pay off Rs. 20,000 on a Rs. 25,000 bill, guess what you are charged on- not 5,000 but the entire Rs 25,000! Pay up on time. Pay up the whole amount.

# Don't connect your salary account to your credit card account: If you dispute a payment with a pure cc relationship, the cc vendor can do little till you both settle the dispute. But if you have a card with your own bank, it will just sweep the money from your savings account in case of a dispute. It has happened before and it will happen again.

# At purchase point, ask if any discount scheme is on

# Black out the CVV number: Those three or four little numbers at the back of your card. Now most of the credit card thefts online happen because somebody gets hold of your CVV number. When you black it out, no enthusiastic checkout boy or girl can read and use it. So, either write them down somewhere that is handy or memorise them really well.