They say you can’t have your cake and eat it too, but with credit cards, you can.
Swiping that flash of gold can actually help you get more than just what you buy.
You can be a smart credit card holder and get the best out of your card by taking advantage of the perks the banks offer and by paying your dues on time.
Here is a look at 5 smart ways by which you can gain by using credit cards.
1. Possible tax savings
Credit cards can help you save tax. Surprised?
The finance ministry is working on a proposal whereby all credit and debit card users may get a tax rebate for using cards for purchases. This move is likely to help the government promote card usage, thereby, clamping down on black money in the local economy which floats through cash transactions on valuables, like gold.
So, get ready for receiving income tax rebates while paying your bills through electronic means using credit cards. If you are a merchant, a shopkeeper or a retailer, accepting credit card payments from your customers would help you get 1-2% reduction in Value Added Tax.
2. Cash backs and reward points
Banks offer cash backs and reward points on credit card purchases which can be effective money saving tools for card holders. The cash back offers generally vary between 5 to 25 percent of the bill, depending on the type of card. For example, if the credit card company is offering a 5 % cash back facility for telephone bills, you can receive a credit entry of Rs 50 for every Rs 1000 paid towards it. You also have an option to request the cash back earned to be adjusted against the outstanding amount for the next month, to ease off your monthly dues.
Reward points from cards too vary according to card types and can be accumulated for redeeming against some purchases or for some freebies and free tickets from sites where the card having a tie-up.
3. Exclusive privileges
Credit cards offer you exclusive services including concierge services, frequent flier rewards, complimentary entries to world class lounges, clubs, special offers at malls, retail outlets, spas, restaurants etc.
Such exclusive offers can help you in saving money as well as getting perks for using credit cards. For example, if you are a frequent flier and use your credit card for booking air tickets, you not only get rewarded by the airline for being a loyal customer, but can also accumulate reward points. These points can be redeemed for cash or can help you save on your next booking.
4. EMI options
Credit cards can work as pre approved loans for making easy purchases. You can convert your heavy bills instantly to easy installments ranging from 3 to 12 months, depending on your bank and the credit card.
EMI options on credit cards come with interest charges, which may start at 1.25% and can go up to 2.5%. But, with a careful planning and research, you can avail EMI options on credit card for shorter tenures and with zero processing fees and thereby, make the best out of it.
5. Pooling of expenses
Mohan never checked his monthly expenses as he used multiple sources like cash, net banking and cards to pay his dues. One month Mohan decided to pool in all his expenses and pay them using his credit card. To his utter surprise, Mohan was able to track his monthly expenses like never before. Like Mohan, channelizing miscellaneous payments through one medium like a credit card would help you track your expenses efficiently. This helps you plan your finances better.
Using the cash back offers and reward points, Mohan was also able to pay all his bills and saved some money on them as well.
Credit cards have multiple advantages and can offset your monthly expenses if used wisely. Holding a credit card is a responsibility and you can gain financially by being credit card holder. You can have any dessert you like.