But our point of concern is that how do we make money from credit cards. Whenever we buy anything using our cards, then we are supposed to make the payment within around 35-55 days. This depends upon the cycle of the bank and the date on which you have used your card for making the payment.
Suppose that you get a due period of 55 days on a shopping of a bike worth 80,000Rs. You did have the amount in your saving bank account, but you made the payments on the 55th day. Assuming an interest rate of 4% for saving banks, you actually saved/earned 482Rs. That's a big boost. Moreover many times banks give reward points for using your card, that's an extra bonus.
I remember that once I and my friend went to a hotel for lunch in Noida. I was a student at that time, and we all are always short on cash at those times. The bill was around 500Rs. My friend Abhinav payed the amount using his credit card. I being a humble friend payed him 250Rs. as cash. Next week Abhinav informed me that the bank has given cash back on that 500Rs. and the entire amount was reverted in his account. What a shocker was that for me.
One of my friend Tapan, has a lot's of credit cards. I always used to ask him that is he not scared of defaulting on any of the cards, maybe by mistake. He told me that playing with credit cards is an art, and it does save good money to him.
I realized this fact a bit slowly, but truly if the cards are properly handled then you can earn some money.
Here's the summary of the process.
- Use your Credit card for your shopping and payments.
- Make the payment within the due period, somewhat near the end of due period.
- You will earn interest for that amount in your savings bank.
- You may also earn points on using credit card for shopping, which can be redeemed later.
- Never default on your card, as it will spoil your credit worthiness.
- And finally Credit cards are asset in times you are short of money.
So guys use your Credit cards to make some extra bucks.