Playing your cards the right way

MY tryst with credit cards began in the early 90s in India. We were newly-weds and were coping with the demands of a student and family life when we began using the plastic card to manage our household expenditure.

All the while we were fighting the Indian mentality of avoiding credit and trying our best to withdraw cash only during emergencies. This was also the time when credit card usage was evolving in India and we were charged an extra 2.5 per cent if we chose to "pay by card".

However, soon enough banks and traders realised the potential of attracting more card-users and the reduced risk of handling credit cards transactions than cash.

Plastic money was soon accepted widely including the old-fashioned Indian Railways as members of the business community found that they were losing customers by only accepting cash.

The real breakthrough came when banks tied up with India's leading petroleum companies and consumers could buy petrol without any additional charge and the mall culture began slowly sweeping the country.

To match this people earning a certain salary found that credit card companies were falling over themselves to offer plastic money practically free of charge. We did not have to move a muscle to apply for a card.

The sales executive would come to your home or office and collect your application and would not charge a penny for the facility or the use of the card. Other checks would follow and the credit card would be delivered to your home by courier.

Suddenly the Indian consumer was discovering the pleasures of 'royal' treatment and the potential of enjoying free credit. By 2001, I was paying almost every bill including my grocery and vegetables with my card as I do today in Bahrain. I needed cash just to pay my housemaid, newspaper and car wash boy.

And my purse grew bulkier not with cash but with the number of credit cards and loyalty cards I would carry with me all the time.

At the Lulu of India (Big Bazaar) we got one kg of sugar free every month for using the Big Bazaar ICICI card and an additional 10 per cent discount on every purchase made!

I was also receiving additional 'air miles' by using a particular credit card; redeemable points at posh stores with loyalty-cum-credit-cards and some companies also had excellent gift offers.

While enjoying free credit was unbelievable, as a family we also realised that we needed to exercise some financial control.

We began following statement dates, preparing a list before we went to shop and agreed never to fall prey to compulsive shopping.

My colleagues thought I was crazy but I actually discovered that I was saving money by following certain simple rules.

As my wise husband, Kesavan, a senior banker, says: "Use multiple cards (maximum three) with different billing cycles; never roll over or pay interest on card balances; never withdraw cash using a credit card; try to never pay any fee on a card (annual, maintenance etc) and always look for promotional offers to maximise your benefits."

Also be ultra careful with your cards ... keep a record of their details and emergency phone numbers.

Try and never let it out of sight and if you do lose a card notify the company immediately and get it blocked. Also, use a different card for online transactions preferably one with a lower credit limit.

Read the blue print carefully before taking any card and be careful on your transactions abroad ... exchange rates and charges can surprise you.

Credit cards are not for people who cannot manage their spending because rolling over the balances each month can prove costly on some cards with high interest rates or fixed fees. You need to shop around for the best deal.

At the same time, thanks to the internet and extensive security features hidden in the plastic strip behind the card, you can now buy a ticket for a sporting spectacular event in any part of the world from the comfort of your own home or participate in an international auction to snap up a Van Gogh ... providing you can afford it, of course.