Getting a Credit Card

[arj]

The answer is - they expect the users to splurge/over-spend. And then they anticipate users to default. That is the business model of credit cards. The interest rates on most CCs are obscene.

This is not really how a CC model works.
They get a transaction fee which they charge to every vendor and which varies across CC companies eg VISA to AMEX. The vendors gets access to easier sales and the user gets a credit period to pay and also bonus points which is a win win. The higher the usage the higher their revenue, thats all and thats why they give you points ie Its paid for by the seller not the buyer.

Withdrawing money /not paying on time etc is where interest rates kick in but the CC companies see it as a penalty ( like a EMI default) and for any user a basic sensibility to spend within ones limits and pay on time is more than enough and all you need to do is make sure the running tab is lower than your account

To the OP.
Debit cards are riskier since in case of any payment the money has already let your account. For a fraud, with a CC you can raise a fraud request without the money having left your bank account which seems like a safer option especially online/international. Apps like Cred can help you manage this better and also get you even more benefits/cashbacks although you are not sure of what they do with your data.

Go to you tube and search for the difference there are some excellent videos. with min smartness you can get more value out of a CC than a DC.

Also dont go by the annual fee but the annual fee and the rewards. Some Cos like Amex offer higher rewards for the higher fee and allow you to exchange points for either repayment of the annual fee or conversion to products like Amazon vouchers etc.they give you more than 45 days credit but penalty is also higher

Any HDFC Visa or Mastercard is very good to have as long as you use the basic hygiene of keeping tabs of your spends vs willingness to payout every month.

 

[Lizard King]

Virtual ke

I use Virtual keyboard while using Netbanking or Debit Card, and am curious about how you are safe using CC. Can anyone explain a bit in more detail? So far, I have stayed away.

I use Virtual keyboard while using Netbanking or Debit Card, and am curious about how you are safe using CC. Can anyone explain a bit in more detail? So far, I have stayed away.

Virtual keyboards are just a protection against keylogger programs, nothing more. There are many more ways to commit fraud. Stealing your data from the 3rd party payment gateway for example. Both cards are equally vulnerable, but while your credit card cannot be siphoned off beyond it's limits, debit card fraud can totally empty your bank account.
Also most credit credit cards have fraud protection, where you can dispute a transaction and the card company investigates or tries to reverse the transaction. Since the money has not left your account, you don't lose anything. You can refuse to pay if it is a fraud. The loss is of the card company. But in debit card, if you can't reverse the transaction, money is forever gone from your account.

This is not really how a CC model works.
They get a transaction fee which they charge to every vendor and which varies across CC companies eg VISA to AMEX. The vendors gets access to easier sales and the user gets a credit period to pay and also bonus points which is a win win. The higher the usage the higher their revenue, thats all and thats why they give you points ie Its paid for by the seller not the buyer.

Withdrawing money /not paying on time etc is where interest rates kick in but the CC companies see it as a penalty ( like a EMI default) and for any user a basic sensibility to spend within ones limits and pay on time is more than enough and all you need to do is make sure the running tab is lower than your account

To the OP.
Debit cards are riskier since in case of any payment the money has already let your account. For a fraud, with a CC you can raise a fraud request without the money having left your bank account which seems like a safer option especially online/international. Apps like Cred can help you manage this better and also get you even more benefits/cashbacks although you are not sure of what they do with your data.

Go to you tube and search for the difference there are some excellent videos. with min smartness you can get more value out of a CC than a DC.

Also dont go by the annual fee but the annual fee and the rewards. Some Cos like Amex offer higher rewards for the higher fee and allow you to exchange points for either repayment of the annual fee or conversion to products like Amazon vouchers etc.they give you more than 45 days credit but penalty is also higher

Any HDFC Visa or Mastercard is very good to have as long as you use the basic hygiene of keeping tabs of your spends vs willingness to payout every month.

True that. Credit card rewards responsible and disciplined financial behavior. It is not for someone who doesn't follow basic financial rules.

 

[bloredude]

This is not really how a CC model works.

"They get a transaction fee which they charge to every vendor and which varies across CC companies eg VISA to AMEX. The vendors gets access to easier sales and the user gets a credit period to pay and also bonus points which is a win win."

Theoretically, that is indeed how a CC supposed to work. But that alone will not run their business profitably. That also doesn't explain unfair business practices most Indian CC issuing companies indulge in.

"The higher the usage the higher their revenue, thats all and thats why they give you points ie Its paid for by the seller not the buyer."

That's what I said in a different set of words - "they expect the users to splurge/over-spend". They reward higher spend, that's evident.

"Withdrawing money /not paying on time etc is where interest rates kick in but the CC companies see it as a penalty"

Penalty need not be a high rate of interest. More than penalty, it is where they draw profit from. But I can understand if someone else perceives it differently.

"for any user a basic sensibility to spend within ones limits and pay on time is more than enough"

I said the same thing in a different set of words - "IME, the bottom line is - if you are a disciplined spender who doesn't ... ... ... miss a payment - it's a good instrument to have."

 

[sud98]

While I am happy a lot of people here dont like or want a credit card, the reasons for the same are a bit surprising.

Do remember that
1. A credit card helps you build a credit profile. A good credit score helps you get better loans/faster loans and in cases higher value cards.
2. All credit cards have in simple terms, an insurance (repudiation). If you think a transaction has not been made to you, filing the same is a simple process and the money will revert back once the checks are made. (This also happens with UPI but only if the transaction was not successful). Fraud transactions are not covered in Debit or UPI type transactions, you have to file a police complaint.
3. Loyalty points. The amount of money spent and that can be redeemed is of tremendous value. Much higher than the cashbacks your wallet or UPI app gives.
4. Like most said before, use it only if you have the discipline to pay on time. There are enough ways to do so, use Cred for reminders and getting some extra (although mostly worthless) points.
5. The best cards have unlimited Lounge access which my family and I have used extensively during my travels
6. They give points, cashbacks and bonuses, so pick one that gives the best returns and in the area that is of value to you.

Hope this helps.

 

[square_wave]

To the OP.
Debit cards are riskier since in case of any payment the money has already let your account. For a fraud, with a CC you can raise a fraud request without the money having left your bank account which seems like a safer option especially online/international. Apps like Cred can help you manage this better and also get you even more benefits/cashbacks although you are not sure of what they do with your data.

Any HDFC Visa or Mastercard is very good to have as long as you use the basic hygiene of keeping tabs of your spends vs willingness to payout every month.

I am in this camp. I cant ever think of NOT having a credit card! I have 3. Use it wisely and you will only have benefits. If you are a compulsive shopper, it can be a problem though!

The trick is to equate a credit card directly and honestly to your buying capacity. Then it is directly linked to your earning capacity in your consciousness. Credit card is not free money!

 

[Nitin K]

I use Virtual keyboard while using Netbanking or Debit Card, and am curious about how you are safe using CC. Can anyone explain a bit in more detail? So far, I have stayed away.

I use netbanking for paying only utility bills & neft transfers. Like you, I too use the virtual keyboard. For netbanking I try & do it only my laptop/desktop from home & avoid doing it anywhere else outside or even on my mobile phone. Not saying that this is 100% safe but just minimising the risk factors. The hackers are smarter.
For any other transactions I use the credit card whether Amazon or any other site/showroom for buying electronic stuff as you get good deals generally on a card rather than paying by cheque. Before using the credit card on an unknown website site, I try & see if the site is safe by googling it. Never use the card on unsafe sites however tempting the offer maybe as it may be to lure you in exposing your credit card details. After all the money lost due to fraud also belongs to someone else even if the onus is on the bank. Hence we also need to be as responsible as possible before using the card. Don't disclose the 3 digit CVV no. behind the card to anybody as only you are supposed to know it . Also if you need to type the 4 digit password for any transaction anywhere outside, cover the hand you are typing with the other hand as mentioned in the atm. Always pay your monthly outstanding amount on time to avoid heavy interest. You can try & keep the payment date on the 10th of every month since by then your income would be credited to your savings account to pay for the same. Use the card only if the need arises & not otherwise.
With responsibility & precautions, the risks are minimised & absolutely no harm in going for a credit card. In a worst case scenario you can take the HDFC one assist facility where they charge around Rs. 2000 annually to cover card frauds not done by you & they will take the necessary procedures & block the card after you inform them.. Also if you lose your passport /Pan/Aadhar/Driving license, then the One Assist division will get it done for you & you don't have to run around for it.

 

[arj]

"They get a transaction fee which they charge to every vendor and which varies across CC companies eg VISA to AMEX. The vendors gets access to easier sales and the user gets a credit period to pay and also bonus points which is a win win."

Theoretically, that is indeed how a CC supposed to work. But that alone will not run their business profitably. That also doesn't explain unfair business practices most Indian CC issuing companies indulge in.

"The higher the usage the higher their revenue, thats all and thats why they give you points ie Its paid for by the seller not the buyer."

That's what I said in a different set of words - "they expect the users to splurge/over-spend". They reward higher spend, that's evident.

"Withdrawing money /not paying on time etc is where interest rates kick in but the CC companies see it as a penalty"

Penalty need not be a high rate of interest. More than penalty, it is where they draw profit from. But I can understand if someone else perceives it differently.

"for any user a basic sensibility to spend within ones limits and pay on time is more than enough"

I said the same thing in a different set of words - "IME, the bottom line is - if you are a disciplined spender who doesn't ... ... ... miss a payment - it's a good instrument to have."

I am not an expert but tried to understand the mechanism and I do not really understand some of the points above but basically In any credit card transaction there are several entities , in a simple scenario 4 entities.
1. Network or Credit card company- like VISA etc etc which are global and not india
2. Issuing bank eg HDFC/Axis
3. Merchant: the seller
4. Buyer

its 1 which makes money on transactions and these are not indian or country specific but may have local business units for regulatory purposes

Issuing Banks is perhaps what you are talking about and they stand to gain by higher transactions or liquidity it generates...they can have several models ranging from free cards to paid cards with higher returns and lots of interplays of penalty interest percentages and periods

In the US, which is a very credit based economy they do make part of their money from penalty but it is only one part of it..there are many other mechanisms like interchange fees which are negotiated for that..only a banking expert can tell you that but we as users are oblivious to all that.

India which is still driven by a savings mindset and many folks pay up in advance unless its forgotten. In fact you can avail a direct debit option as well where the CC value is directly debited from your linked savings account. hence practically that makes it a Debit card with a longer credit period and more rewards.

You can control the max value and total credit limit also in most cards. eg one can set a limit online that one transaction cannot be more than 20K and in a month the total credit is 1L and along with a direct debit . that way you get best of both worlds.

Most credit card also give you Fraud insurance if you feel there has been one. Not aware if debit cards do that although some banks do give cashback rewards on Fuel surcharges etc.

In the end its ones own choice but if used smartly credit card is no doubt a superior mechanism.

 

[OM_2K19]

Do remember that
1. A credit card helps you build a credit profile. A good credit score helps you get better loans/faster loans and in cases higher value cards.

This is a two edges sword. If you own a CC and don't spend, your CIBIL goes down. If you don't pay in full, but min, late payment, CIBIL goes down. The Credit Score is all about how you maintain your Credit/Debit ratio, and how Agencies calculate this is beyond the understanding of most common people.

How Does a Credit Card Affects the CIBIL Score - Wishfin

Go through all the unknown activities of the credit card that affect the Cibil Score. Avoid Such activities and enhance your Credit Score.

www.wishfin.com

 

[vnmathur57]

The bottom line is that a Credit card does not enhance your financial capacity. It is only a temporary convenience with some bonus, if used wisely. You have to clear the dues in time otherwise you will repent

 

[chander]

If you are a disciplined individual - you can make money off your credit cards actually - nothing fishy here just using a credit card smartly I have been doing this for ages and got the most amount of benefits during COVID as almost entire shopping shifted online The name of the game is "discipline" and understanding what a CC really is and how it really works which I believe many people here have already explained.

I have 3 CCs and they are a very important part of my financial planning each month.

 

[bloredude]

I am not an expert but tried to understand the mechanism and I do not really understand some of the points above but basically In any credit card transaction there are several entities , in a simple scenario 4 entities.
...........

"1. Network or Credit card company- like VISA etc etc which are global and not india" - They aren't "Credit card company" but Payment processing networks. And they offer same/similar offers for both types of cards. They are just payment settlement networks. They are happy to part with part of their earnings so long as the payment goes through their network.

Features like "Lounge Access" are provided by these entities. And their offers are extended equally well to both Debit and Credit cards.

"2. Issuing bank eg HDFC/Axis" - Issuer - This is the most influential entity in this chain. This is the entity that is behind the cashback program and features like that. These are localized. It is also these entities that actually handle the "credit" part. Hence they get to play the most influential part in the overall Credit/Debit card experience.

Since we are talking in the Indian context (my assumption, could be wrong), this becomes an even more important point. Indian issuers indulge in more unfair practices than would happen in a well-regulated economy. These are the entities usually responsible for a bad CC experience in India.

"3. Merchant: the seller" - It makes no difference to the merchant whether you pay by Credit card or Debit. He gets the money in either case with the same ease. Credit card payments cost them the same or more than Debit card payments. So they stand to get no benefit from preferring CC payment.

In practice, the reason we see offers by Merchants on CC payment is not really the merchant, but the issuer, who gets to decide which kind of instrument they extend the offer to. The Merchant is just an extension arm of the Issuer.

"4. Buyer" - Many Debit cards these days come with "Buyer protection". In general, it is yet not as good as in case of CC, but the trend is picking up.

 

[bloredude]

A partial list of Debit Cards offering "Lounge Access" in India.

• Axis Bank Burgundy Private Debit Card
• Axis Bank Delight Debit Card
• Axis Bank Priority Debit Card
• Axis Bank RuPay Platinum Debit Card
• Axis Priority Platinum Debit Card
• Axisbank Prime Titanium Debit Card
• Bank of India RuPay Platinum Debit Card
• Central Bank of India RuPay Platinum Debit Card
• Citi Priority World Debit Card
• Citigold Private Client World Debit Card
• Citigold World Debit Card
• HDFC Bank EasyShop Platinum Debit Card
• HDFC Bank Millennia Debit Card
• HDFC Bank RuPay Premium Debit Card
• HDFC Bank Times Point Debit Card
• HDFC EasyShop Platinum Debit Card
• HDFC Jet Airways Debit Card
• HDFC RuPay Premium Debit Card
• HDFC Times Points Debit Card
• ICICI Bank Coral Debit Card
• ICICI Bank Rubyx Debit Card
• ICICI Bank Sapphiro Debit Card
• IDBI RuPay Platinum Debit Card
• IDBI Visa Signature Debit Card
• IDFC First Visa Signature Debit Card
• IndusInd Bank Pioneer World Debit Card
• IndusInd Bank World Exclusive Debit Card
• Indusind Signature Exclusive Debit Card
• JetPrivilege HDFC Bank Signature Debit Card
• Kotak Privy League Signature Debit Card
• Paytm Platinum Debit Card
• Paytm Rupay Debit Card
• SBI Platinum Debit Card
• SBI RuPay Platinum Debit Card
• Yes First World Debit Card
• Yes Premia Debit Card
• Yes Prosperity Platinum Debit Card

 

[bloredude]

To build a Credit score a better mechanism is to avail loans. Just take a small personal loan and pay it back in time or beforehand. It will help build a credit score better than a CC.

Another method is just to have free cash lying in a savings account (not any other instrument). If you have a substantial amount lying in an account that reflects in your DAB, the bank will call you repeatedly offering the best cards they can for your eligibility.

Now, I have begun preferring DC due to higher returns on spend. I at times get upto 4% returns on my spend, which is quite significant considering that this part comes from the bank alone (and which is in addition to any Merchant offers).

Both CC and DC have their advantages. One should choose wisely. What works for me need not work the same for others, and vice versa.

Like the popular adage in audiophilia - YMMV.

 

[all4music]

...
Lastly, if you do get scammed/defrauded the recovery process is nearly same in either cases.
...

This is not the case. Case in point: My credit card had a fraudulent charge of 1.5 lakh on one fine morning. All i had to do was call up customer care inform about the issue. Charges were reversed on my card while the bank is doing their due diligence about the transaction.

And, recently Dad had to make an online payment for some transaction and he used debit card. In reality the online link was fraudulent and his account has been emptied. Luckily it was't his primary account. It doesn't look like he'll get his money back.. he has even lodged complaint with police.

While we definitely need to be careful while using any card, there is no doubt credit cards are much safer atleast in my experience.

 

[bloredude]

This is not the case. Case in point: My credit card had a fraudulent charge of 1.5 lakh on one fine morning. All i had to do was call up customer care inform about the issue. Charges were reversed on my card while the bank is doing their due diligence about the transaction.

And, recently Dad had to make an online payment for some transaction and he used debit card. In reality the online link was fraudulent and his account has been emptied. Luckily it was't his primary account. It doesn't look like he'll get his money back.. he has even lodged complaint with police.

While we definitely need to be careful while using any card, there is no doubt credit cards are much safer atleast in my experience.

A credit card is not 100% immune to frauds. I know of stories from my circle with frauds involving CC. So a CC is not a bullet proof security arrangement.

If you click a link to make a payment without being sure where the link leads to nothing can save you. I'm surprised about account being emptied though. I find it a bit strange. I may have transacted thousands of times using DCs, in person and online. Not a single incident.

 

[OM_2K19]

These days banks offer the facility of setting a transition limit on CC. It's highly advisable to set a limit to avoid any fraudulent transaction. Precaution is better than Cure.

 

[sud98]

I am not sure of the reasons for going for a debit card, when it offers no benefit AFAIK , unless you are financially indisciplined. Using a 50 day credit period can only be a boon and helps you manage your financial expenses much better as you can plan your spends accordingly. Using a UPI/debit card means you have already spent the money and the control is in the amount left in the bank.

While debit cards do give some benefits like lounge access, its typically limited and its hard (if impossible) to get an access similar to Amex Platinum or HDFC Infinia equivalent.

Since the OP has asked for a credit card, teaching him on 'evils' of credit cards seems a bit of stretch. Its almost like saying to a person in the introductions section, please dont get into this rabbit hole as you will burn your pocket, lose all your money and your peace in this audiophile journey

 

[jbkar]

I will never say that stay away from CC. It has many benefits.

So many members has given very valuable answers. I am adding few more.

1. Imagine there is a demand for hospitalization and you need a couple of lakhs upfront payment in the counter? CC is the best friend in those moments.

2. You get average 1% cashback on all your spends.

3. Some premium cards offer free lounge access in Airports.

But if you are a impulsive buyer who cannot control on his spending then you need to think twice before applying for it

 

[buzzaro]

I am not sure of the reasons for going for a debit card, when it offers no benefit AFAIK , unless you are financially indisciplined. Using a 50 day credit period can only be a boon and helps you manage your financial expenses much better as you can plan your spends accordingly. Using a UPI/debit card means you have already spent the money and the control is in the amount left in the bank.

While debit cards do give some benefits like lounge access, its typically limited and its hard (if impossible) to get an access similar to Amex Platinum or HDFC Infinia equivalent.

Since the OP has asked for a credit card, teaching him on 'evils' of credit cards seems a bit of stretch. Its almost like saying to a person in the introductions section, please dont get into this rabbit hole as you will burn your pocket, lose all your money and your peace in this audiophile journey

Yes, this thread sounds a lot like this:

OP: I want to buy a car.

Others: Look, here, buddy. Stay away from that evil mechanism on wheels. It's very hard to stay disciplined while driving. You will surely end up in some gruesome accident. Better stick to public buses.

All educated adults who earn money should be financially literate. It's your job to learn how to manage money if you are smart enough to earn it. Credit cards are not some traps laid out by banks to make you spend more and spend recklessly. They are a tool and you have to learn how to use them.

I have maintained 2-3 cards in the last ten years. Only used paid cards for some time. But my spending habits have afforded me premium cards without any annual fees and now, I have got them converted to lifetime free. In the last three years (before Covid) most of my flight tickets were paid for by my credit card points. My Amazon card offers 5% cashback on most purchases along with special sale promotions which offer 10-15% off. Airport lounges have become crowded lately, but even using CC on Zomato, Swiggy etc is much more beneficial. I can't imagine dropping these benefits for anything.

 

[bloredude]

"I am not sure of the reasons for going for a debit card, when it offers no benefit AFAIK"

There are tons of Debit Cards that offers great benefits. One only needs to educate oneself about them rather than shut their eyes and refuse to see. In any case, one shouldn't comment on what one doesn't know.


"unless you are financially indisciplined."

The whole reason why a Debit Card is preferable is because it inherently promotes financial hygiene. The whole reason why a CC is a bad instrument is that it is often a beginning of over-capacity spending. People often become habitual over-spender.

A DC is an inherently disciplined instrument, while a CC is inherently an instrument meant for introducing spend on credit. If someone can't understand the difference between CREDIT and DEBIT, no one can make them understand.


"Since the OP has asked for a credit card, teaching him on 'evils' of credit cards seems a bit of stretch."

Some people really needs to understand the meaning of a "forum"/"discussion board", and what it is for.

People indeed go to fora / discussion boards looking for good advices, looking for answers, looking forward to learning pros and cons of something, including the OP of this thread. Forums are very much for sensitizing people about the good and the bad. Forums are very much meant for providing people with alternative choices. Anyone who thinks otherwise needs to literally learn about what forums are meant for.

Since a few people are acting too thick skinned, let me quote the OP himself. Here is what the OP said - "wanted to run this by people who have been using it regularly ... ... ... any suggestion or advice"


Sad to see such a mob behavior being actively supported here including by key figures that are expected to promote hygienic discussions. But if a mod himself promotes trolling then.