How to Effectively Use Your Credit Card in a Less Cash Economy

If you’re an ICICI, HDFC or an Axis Bank cardholder, the pervasive impact of November 2016’s demonetisation would have magnified in intensity. The mandate put forth by the trio — A charge of Rs. 5 levied for every Rs. 1000 transacted, or Rs. 150 whichever is higher is a further step in the general direction of moving towards a ‘cash-less’, or, for the time being, a ‘less-cash’ economy.

As of 1st March, 2017 HDFC Bank has taken step in the aforementioned path with a steep increase on a plethora of activities involving cash transactions.

Striking while the iron is red hot, e-wallet giants PayTM and Freecharge rose to the occasion with a slew of activities to alleviate the waves of change. The former has been seen as the harbinger of change with a 700% rise in overall traffic on the platform and 1000% growth in the value of money added to mobile wallets.

The more traditional forms of payment, credit and debit cards have had a whopping surge in usage. Analysing the data provided by RBI, the number of transactions (on actuals) for credit cards have risen by 30%. Whereas debit cards have seen a surge of 195%, comparing data between October and December.

This raises the question — with a multitude of credit cards available in the market that offer a range of benefits in terms of cashback, air miles, credit card points, we continue to use debit cards for our every day requirements. As the disrupted payments status quo ebbs and flows into its new form, here are the top 5 ways through which you can make the most out of your credit card:

• Get the right credit card for your needs.
  The demonetisation has witnessed the opening of over 30 Lakh Bank accounts out of which, out of which SBI alone had 11.8 Lakhs. The aftereffects, of course, would be more leads for credit card sales. While choosing a credit, we are left with a multitude of choices — Terms such as a ‘Platinum’, ‘Air Miles’, and certain retail brands have cards with specific previleges. The key is to understand your lifestyle and where you have a greater propensity to spend while deciding the card to sign up for.
• No brainer for big-ticket purchases
  If you’ve planned on purchasing that new MacBook or planning your vacation trip to Singapore, it always helps to use your credit card. Not only will it help in cases of fraudulent services and you can dispute any faulty charges if an error is made. Some credit cards offer extended warranties and protections on purchases. Also, this will definitely go a long way towards your rewards total.
• Get cards with healthy sign up bonuses
  Wouldn’t it be great if your new credit card gives you 30,000 to 40,000 in points? Yes! Yes, it would. Of course, the catch would be that you would have to spend a certain amount within the first few months to redeem this. A smart alternative would be cashback cards without any minimum spending requirement.

Your holiday resort in Hawaii would most likely accept Credit Cards only

• The best avenue to pay your bills
  Although e-wallets have ventured into this space with a similar set of benefits, it always helps to pay the utilities and insurance premium bills through your credit card. Making regular payments which you are sure to pay off in the stipulated period always helps when it comes to building your credit score.
• And on that note, (try to) never carry a balance
  When it comes to credit card use, this is the holy grail. Not paying a single penny in interest or fees. Avoiding high interest charges, the relief of staying out of debt and keeping your financial options open for unavoidable expenditures keeps your future investment options completely open.