Plastic Money!

Just thought of sharing some good stuff about plastic money and how we can change life using the same. Many of us feel that plastic money is referred to money spent by only credit cards but it includes debit cards as well.

There is a conception that credit cards make you spend money exceeding your budget as you tend to loose track of all the expenses which results in spending virtually next 2-3 month’s salary in a single day or in a month’s time. I tend to differ with this conception as this might be true only for people who don’t think before spending. In real terms, the credit card is one concept which can bring money to you. Say, today, you have spent Rs 10,000 on buying different things and you do so by credit card, the money in your bank account will remain as it is and your credit card statement will be generated after about 25-30 days and the due date will be good 15 days after the statement date, so in fact you get a period of about 40-45 days to pay Rs 10,000.  Many credit cards come with a point system in which for every Rs 100 spent you will get 1 reward point which will be equivalent to 1 rupee and can be redeemed once you have 250 points or so (However, it depends upon the credit card you have). Also, the interest on Rs 10,000 for 40 days (taking the lower limit) in a saving account will be Rs 32 (taking the interest rate as 3%). Hence, you will be saving Rs 132 if you will spend by credit card. Also, this is the minimum sayings as many of the credit cards come with too many offers (discounts raging from 2% – 50% ) on eating joints, shops, PVR etc which remain through out the life time of the credit card.

Apart from savings, credit card help us in carrying less money in our wallets which is great, taking in account the no of thefts, which have claimed many lives as well, that have occurred in India last year. In fact, when your credit card get lost or stolen you can easy call the customer care and block your card. Also, many credit cards now come with the insurance which will guard you from the spends that have been made on your credit card from the time you put a request to block the card to the time when the card actually gets blocked.

Using the credit card online is risky but only on the sites which are not secure. Secure sites which are associated with company’s such as Verisign etc. put your credentials through encrypted data which is difficult to decrypt. In fact, in countries like US, UK etc you will get discounts upto 50% when you shop online and in the majority of the cases the shopping can only be done using credit cards. So first check the site, on which you are trying to shop, and see if it is secure.

We all have credit cards – some have 10-12 and others have 2-3 cards. We should be very careful while paying the bills as it has to be paid before the due date as other wise you will have to pay interest, from the date of purchase, till date. Interest rates in question are about 3-4 % per month on paper which translates to 38-45% annually. Hence, make it a point that you pay bills 2 days before the actual due date. Also, it is advisable to have the same billing cycle of all the credit cards you own and not to own more than 4-5 credit cards as it becomes difficult to remember their due dates and expenses incurred on each one of them.