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Shop Smart With Credit Cards

By: Makemymoney

People buy goods and services to fulfill their daily, occasional and specific needs. These are clothes, bed, food, car, school fees, doctor fees, etc. people shop these goods from the local market, supermarket, malls or online. To shop these items the buyer has to make payment and pay money to the sellers.

In early human civilization, goods were exchanged for goods, that was called the Barter System. Then gold coins were used in the exchange of goods, the buyer had to give gold coins to the sellers. After that currency notes and coins were introduced and it made the legal tender money. Anyone can shop for goods and buy services in exchange for these notes and coins. A seller is legally bound to accept them, he can not deny to take it.

Nowadays, various modes and channels of payment are available that shoppers can use. Some of them are Cheque, Bank Demand Draft, Internet Banking, Credit Card, etc, with the advancement of technology and the wide reach of the banking system, credit cards have become the smart and cashless way to shop.

A credit card is a card or financial instrument with a metallic clip that stores data   These cards are issued by the banks to their customers depending upon their income, credit history, relationship with the bank. Credit cards are used for making payments for shopping one has done. Suppose you went to a mall and bought some clothes for yourself, at the time of payment, you just need to swap your credit card at Point Of Sale (POS) machine, enter the amount and PIN and payment is done. There is no need for cash or cheques, its very smart and easy way to shop.

Now let us understand how it works. A credit card issued by the bank carries a certain credit limit and billing cycle. Credit limit means the amount to which the card can be used for shopping. A billing cycle is a period for which bill is generated and then the cardholder has to make payment. Suppose the billing cycle is from 1st to 30th of the month, the cardholder uses a credit card for shopping from 1st to 30th of the month for Rs. 20,000. On 1st of next month, a bill of Rs.20,000 will be generated and cardholder will be provided approx 15 days to pay towards the outstanding amount.

Using a credit card is a smart way of shopping. Credit card means there is no worry of carrying cash with you and no chance of losing it. One can also save the money for the billing cycle, which earns him interest on the amount as he does not need to make payment at the time of shopping, he will pay after the billing cycle

There are even smarter ways to shopping with credit card There may be a situation where it is necessary to buy a product but one does not have the money to buy it but knows that he will be receiving the money within 2 months. In this situation, he can go and shop, pay the minimum amount as indicated in the credit card bill and pay the remaining bill amount in the next month bank may charge a small fee for this.

In some situations, you may want a product which costs a big amount. You may not be able to pay such at one go. In such a matter bank provides you with an option to convert your bill amount into monthly EMI. Bank charges a small fee for this facility. An individual can pay the whole amount in installments of small equal amounts. Let us take an example, credit cardholder purchases a laptop from a website that costs Rs.24,000. An individual cannot make payment of such amount in one shot, so he calls the bank to convert this 24,000 into EMI of 12 months. Bank agrees and charges Rs. 500 for this. Now the person has to pay Rs 2,000 monthly for a period of 12 months.

There are specific types of cards also like there is an EMI card from Bajaj Finance which allows the cardholders to shop consumer durable goods on EMI without any charges. The cardholder does not need to pay a fee for this. There are credit cards where you get discounts on the cost of fuel if you use these cards. Offers are also on credit cards like you get reward points on your shopping, get movies tickets on a certain amount of shopping or discount on dinner at particular restaurants. All these indirectly saves your money and time.

Shopping with a credit card is simple, easy and convenient.  Credit cards can be used in offline and online shopping, one can use credit cards in a shop or store on POS machine for shopping on e-commerce websites using credit cards is very common nowadays. Just select, shop and pay.

Also read – 5 Types Of Credit Cards & How To Use Them

Another very important feature of a credit card is that you can withdraw cash from ATM or transfer to your bank account. Although the bank charges a fee for this service in case of an emergency, money is not available to a person.

Using a credit card is safe and secure. While using it on POS, you need to enter the PIN that only you know. For online shopping, you need to enter the password and One Time Password (OTP) that you get on your mobile at the time of making payments. And after every transaction through a card, there is an SMS alert.

Another important benefit of using a credit card is that with regular usage of the card and timely payment of credit card, it improves your CIBIL report or credit history.

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