Credit Card – Why You Should Have One & Which One

Why? Here’s why:

• You track your spendings – which has millions of benefits, tracking is a must
• You get rewarded for each spend
• You get an emergency pocket friend that everyone needs (for life & death moments)
• You get a chance of credit rating – that you will require in future

The last point requires a bit of explanation. With CIBIL in place, all the credit activity of individuals is reported at a central location. In future, when you would need a loan for car, house etc., your credit score in CIBIL would help you in getting good interest rates etc. If you maintain a good credit history, you would be a preferred customer getting a good deal.

Which One?

Let’s take the three most important features in a card (that experience taught me).

The most important feature on a Credit Card is how they reward you. In short, rewards should be given back in form of cash or other monetary means (store specific reward points also work, like I go shopping in a store and get a discount of Rs. 1200 for 1200 points on my card).

Next up is whether you can “decrease” your limit on the card. Personally, I would really like my card to have a lower limit, so that I can spend all of my limit without fear of overspending and next month pay off a bill that fits my pocket. That is the correct way to use a Credit Card. Spend only half as much you earn and pay off every bit of the bill next month, 3 days ahead of the due date.

The last feature is the availability and modes of payment (on how you pay their bills back) the card offers you. They should have enough ATMs, or a way to pick up cheques (without charging extra) or an online transfer ability. Some way to get the money across with minimum delay and hassle.

These 3 most important things point to two cards that I have researched thoroughly. One is an ABN Amro Card, which has two of these most important things. It has a Flexi Limit on it (which means you can reduce the limit) and it has a Cash Back card where you get cash back of a Rupee on every purchase of some Rs. X (=200 maybe).

What the ABN Amro card doesn’t have is the ease of payment. They have lesser ATMs and they offer a Master Card, so you have difficulty in paying off their bill using Visa transfers from other banks. Unless, of course, you have an ABN Amro bank account, which would make your Card payments really easy to manage.

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The other card is the Citibank Card (Platinum), that again has two of the above benefits. First off, it has a really good reward system, you get back the rewards as real discounts (1 point = 1 rupee) in a lot of stores. The other benefit is that you get a great deal of payment modes – from the Citibank Account, Visa transfers (from ICICI), plenty of ATMs across cities, plenty of drop boxes here & there and a cheque pick up facility (although they charge you for that probably).

Citibank has one thing missing; that they don’t have any limit decrease facility. Again, you can work around the problem by getting an add-on card issued for a relative and get a limit defined on it (you can tell them to set the limit as X). Once again, it’s not flexible – you can’t increase/decrease it.