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Old 16th February 2010, 16:19   #361
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Originally Posted by tj123 View Post
I have been using it for the past 10 yrs never payed a penny to the bank as interest /late fee.
Welcome to the club. I have been using once since 12+ years and same here. Never let them pinch any interest from me. So i am there BAD customer

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Originally Posted by StarVegabond View Post
my view is simple. Credit cards are not the tool meant for paying the daily expenses needed for living e.g. food purchase, fuel, conveyance, small pleasures etc etc. if one has to borrow for these things, it means only one thing, that person does not have enough income to even support this. It is more dangerous to have credit cards in such a situation
I disagree. I use Credit cards for almost everything and at an average i pay approximately 25K-30K every month as my credit card bills ( multiple cards). Some rules to follow :-

1. Spend only that much which you can re-pay the next month

2. Never even think of letting even a minor amount as balance to be carried forward. I always pay in "FULL"

3. Finally, as human pyschology works, its hard to pay cash. But, its simple to write a cheque for payment irrespective of the total amount. It works wonders for me

If above pointers work for you or anyone with similar thoughts, then credit card is a great instrument. If you cannot, then better use it for "emergencies" as you put it.
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Old 16th February 2010, 16:21   #362
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Originally Posted by bblost View Post
I defer. I pay for almost everything using my credit card.

In fact the only place I do not use a credit card is at my weekend vegetable shopping. That itself is a new idea I had with regard to recession. Not its impact on me but rather an idea that I should be buying stuff from small vegetable carts . This way I give business to small biz near my house.
Plus I never became a fan of meat and fish at supermarkets. So this apart all other purchases are using a CC.

i.e for almost 75% of my purchases even pharmaceuticals I use the CC.

In fact I have 3 different cards and use them depending on their billing cycles.
Needless to add that I have paid interest very rarely on any of them. They are all free for life and even have add on cards attached to them.

All that I do is keep a close watch on what is due on which card.
I could be wrong in remembering the amount of money in my wallet but will be able to give a much more accurate figure on what is owed on which card.
+1 to this.

I pay for all purchases - except Aavin milk - through my two credit cards. The oldest one from Citibank dates back to 1993. Never had any issues. Never missed a payment or incurred interest / late payment charges. The flip side is most of my expenses from 1993 are documented - I never threw away any of the statements. Got free petrol once a year to boot!

I just imagine my credit card to be a debit card, that's all!

Last edited by Gansan : 16th February 2010 at 16:24.
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Old 16th February 2010, 16:28   #363
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I agree with bblost.

Considering that i am in the process of putting down some money on a house, my finances are REALLY tight this month. For the daily living expenses, i rely on my credit card this month, knowing very well that with my next month's salary i will clear the due, and the cycle continues. In the process, i also earn points which i shall redeem sometime when they are ripe.

P.S. : I spend well-within my limits even on the credit card. Mentally, it equals a debit card to me, just that the amount gets debited at a later date.
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Old 16th February 2010, 16:37   #364
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There is just 1 simple rule to using credit-cards effectively : Swipe for only what you can pay back in full when the bill comes next month.

And it does not matter what you use it for - groceries, fuel, medicines, books etc etc. Using for these does not imply a lack of income or any such thing.

"Living within your means" just means that you don't spend more than you earn. It is immaterial whether the spending is done by card or cash.
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Old 16th February 2010, 16:52   #365
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Originally Posted by supremeBaleno View Post
There is just 1 simple rule to using credit-cards effectively : Swipe for only what you can pay back in full when the bill comes next month. .
I never dis-agreed with this

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Originally Posted by supremeBaleno View Post
"Living within your means" just means that you don't spend more than you earn. It is immaterial whether the spending is done by card or cash.
for me Living within one's means = living with what one has with him

and not one is expected to have in future.
Future is un-predictable. be it a small expense or a big expense.
Borrowing (= credit) for living day to day life is not one's means.

Cash as an instrument was selected to avoid getting into the "remembering how much is due from which borrowing (=credit) account"

If one analyzes the credit card user base, i am sure there are atleast 20-25% people on an average default on their payments. Why ?

for various reasons, spending beyond one's replayment abilities, being indisciplined, being too busy, as a fad, for the reason of actually duping the bank, etc etc. There could be more reasons also.

To recover dues from these defaulters, the recovery agents exists.
if everyone is disiplined as this forum members, then these agents would have been out of business.

Most importantly, the Credit card business exsits for the reason that they earn attractive interests, if everyone paid on time, the banks would have shut down this credit card operations.

For myself, Borrowing is for generating more income than what i am paying as fees/interest.
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Old 16th February 2010, 16:53   #366
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I am using credit cards since 1992.
Never had any problems. I use CC for all major purchases.
And use CC even for payment of telephone/mobile bills etc.

But never try to carry forward a balance to next month which will attract heavy interest rate including any purchases done prior settling the balance/pending amount.

If one can plan and use then CC is one of the best instrument!

In addition, banks offer emergency personal loan on the card without any documentation (may be little high interest) which can be used for emergency cash
requirment.

I felt the CC very useful for me all these years!
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Old 16th February 2010, 18:01   #367
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Originally Posted by StarVegabond
for me Living within one's means = living with what one has with him.
True, but how does it become different just because you are using plastic as the payment medium ? Eg. I bought 45K worth of furniture last week. I have enough money in my bank a/c to cover this purchase. So, instead of having to go to the ATM, carry around that much of cash, I chose to pay by card. When the bill comes by end of the month, all I need to do is do a net-transfer of that amount to the card account. I don't see how this becomes living beyond my means, just because CC was involved.

Quote:
Originally Posted by StarVegabond
Future is un-predictable. be it a small expense or a big expense. Borrowing (= credit) for living day to day life is not one's means..
If you think something as near in the future as a monthly credit-card statement falls under unpredictable, what about car-loans for 2years or more? Much more unpredictable, I would think.

Quote:
Originally Posted by StarVegabond
if everyone paid on time, the banks would have shut down this credit card operations.
That should be the bank's worry. Not ours. And you should remember that even if all users pay on time, the bank still gets a cut from the seller - 2.5% of the purchase or so.

Quote:
Originally Posted by StarVegabond
For myself, Borrowing is for generating more income than what i am paying as fees/interest.
And what if one is not paying any fees (lifetime free card) or interest (no revolving credit) ?
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Old 16th February 2010, 18:24   #368
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Originally Posted by supremeBaleno View Post
True, but how does it become different just because you are using plastic as the payment medium ? Eg. I bought 45K worth of furniture last week. I have enough money in my bank a/c to cover this purchase. So, instead of having to go to the ATM, carry around that much of cash, I chose to pay by card. When the bill comes by end of the month, all I need to do is do a net-transfer of that amount to the card account. I don't see how this becomes living beyond my means, just because CC was involved.
i never said, you have to carry cash, all you need is a debit card.
you does not need a credit card if you already have cash in the account and paying back immediately. when you are using debit card you are actually paying by your money and not by bank's (= borrowed) money

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Originally Posted by supremeBaleno View Post
If you think something as near in the future as a monthly credit-card statement falls under unpredictable, what about car-loans for 2years or more? Much more unpredictable, I would think.
Car Loans are concious decision based on one's risk apetite. I had tried to pay as much money as possible upfront and redcue my loan amount. I know few people who have paid for the entire car from the reserves and avoided going for a loan. I also know people who have opted for second hand/thrid hand cars because, they can buy it without any loans.

You may say credit cards also are taken based on one's risk apetite. i fully agree.

but that does not make the future predictable. is it not ?

In case of car loans, banks charge a customer interest rates based on his/her worthyness, hence interest rates are relatively lower, In case of defaults, there is a security of the vehicle which is hypothicated with the bank where as in credit cards, the banks does not evaluate the worthyness for every transaction. hence they carry higher risk and hence higher interest rates.

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Originally Posted by supremeBaleno View Post
That should be the bank's worry. Not ours. And you should remember that even if all users pay on time, the bank still gets a cut from the seller - 2.5% of the purchase or so.
i agree to only the fact that it appears to be bank's worry. What happens when higher % people default ? does this 2.5% cover the risk ? no, hence if you look at global banks, they are selling their credit card business worth several hundred Bn $ to few B$. we saw this last year in US Banks. From where these write-offs have been supported. Most of the banks are supported by governments (=people's money)

ofcourse by tax payers like you and me pay for those defaults as governments can not utilize the money for better causes like healthcare, infrastructure, social security etc.

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Originally Posted by supremeBaleno View Post
And what if one is not paying any fees (lifetime free card) or interest (no revolving credit) ?
there is a say..for every thing customer pays. if you pay using debit card/cash you might get better discounts which you have missed becasue you wanted to keep your money for few more days with you.

Last edited by StarVegabond : 16th February 2010 at 18:37.
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Old 16th February 2010, 18:55   #369
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Originally Posted by StarVegabond View Post
I know few people who have paid for the entire car from the reserves and avoided going for a loan.
I bought my Fiat Linea out of proceeds from the sale of my previous vehicle Maruti Suzuki Versa [Rs 2.35 lakh], sale of Maruti Suzuki shares [Rs 1.25 lakh] and the balance out of my reserves and savings. I did not take any vehicle loan.
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Old 16th February 2010, 19:00   #370
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Originally Posted by StarVegabond
i never said, you have to carry cash, all you need is a debit card.
While not everyone would be having CCs, almost anyone using banks would have a DC because usually the ATM card doubles up as a DC. I too have DCs, but never use them. Instead prefer to use CC. Reason being that DCs have a collateral (cash in my account) against them. In case of fraud, my money gets neatly debited from the a/c. And to get it back would be a herculean task because the worry is mine, not the bank's.

But in case of CC, no such collateral. I pay for what I spend. Any fraud, I report it and it is for the bank to handle it.

Quote:
Originally Posted by StarVegabond
Car Loans are concious decision based on one's risk apetite. I had tried to pay as much money as possible upfront and redcue my loan amount.
You are still exposed to credit and it is much more into the future. If you can accept that, I don't see why you find a max. credit period of 45 days so bad and uncertain.

Quote:
Originally Posted by StarVegabond
in credit cards, the banks does not evaluate the worthyness for every transaction. hence they carry higher risk and hence higher interest rates.
Let them charge whatever interest rate they want - how does it affect me if I am paying my dues fully every month ? That applies to those who use CC thinking they are playing with someone else's money.

Quote:
Originally Posted by StarVegabond
i agree to only the fact that it appears to be bank's worry. What happens when higher % people default ? does this 2.5% cover the risk ? no, hence if you look at global banks, they are selling their credit card business worth several hundred Bn $ to few B$. we saw this last year in US Banks. From where these write-offs have been supported. Most of the banks are supported by governments (=people's money)
You are confusing the American mortgage scam with CC scam. That was about housing prices jacked up ridiculously. And anyway, it applied to American banks - not Indian.

Quote:
Originally Posted by StarVegabond
there is a say..for every thing customer pays. if you pay using debit card/cash you might get better discounts which you have missed becasue you wanted to keep your money for few more days with you.
Which shop distinguishes offers based on payment medium ? I dont know of any in Chennai except the small-time guys who want to get the business of CC-holders, but dont want to pay the 2.5% to the bank and so say, "Sir, if it is credit-card, you have to pay 2.5% extra". In which case, I either decline and move on or if the deal is too irresistible, I pay by cash.

Quote:
Originally Posted by J.Ravi
I did not take any vehicle loan.
Might not necessarily be a good idea, depending on various factors. Whether to take a loan or not, is not solely driven by whether we have money for it with us or not. If you can work out a car-loan at interest rates that are much lower than what you would get by investing it in say an FD, it actually makes sense to take a loan and park your funds in an FD.

Last edited by supremeBaleno : 16th February 2010 at 19:04.
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Old 16th February 2010, 19:30   #371
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Hi SupremeBaleno

You have been a very disciplined user of the credit card and have never defaulted. I would suggest you to also read the fine prints of the credit card application, you will realize the truth.

today a debit card or credit card, they have similar security features. I know this because i used to sell the chips which go into smart payment cards.

In case of a fraud, a direct impact on a credit card user may be a bit less compared to debit card user, but eventually the bank (=governemnt = people) pay for it. But again frauds can be detected/accounted for.

Debit cards today come with security pins which prevent the fraud. Again frauds if at have to happen, they will happen, please note that thiefs are always ahead of the cops.

I am not at all confusing cc defaults with housing scams of US.
i am referring to several US banks selling their CC business with net receiveables worth several hundred B$ to other banks for few tens of B$
and writing off remaining money. this happens when more and more % people think that it is banks money and we can default or not pay the dues. This may be due to their inability to pay in due course of time.

these writeoffs would be eventually supported by government from the taxes collected. Anyway poor people do not pay taxes, rich people know how to evade taxes, so the honest middle class tax payers eventaully pay for the defaults (some of them not all) committed. In India this has not yet happned as we are still (majority) cash economy. but as knowledge increases, people start consuming on credit, this might happen.

again i am not against anyone using creditcard. For myself, i would prefer to use my own money (& not borrowed ) for my day to day living.

Last edited by StarVegabond : 16th February 2010 at 19:35.
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Old 20th February 2010, 10:23   #372
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Originally Posted by StarVegabond View Post
my view is simple. Credit cards are not the tool meant for paying the daily expenses needed for living e.g. food purchase, fuel, conveyance, small pleasures etc etc. if one has to borrow for these things, it means only one thing, that person does not have enough income to even support this. It is more dangerous to have credit cards in such a situation
I would certainly defer on your point, I have been using credit cards continously from the last 5 years and haven't paid a penny till yet for interest. Though got many offers like policies and postpaid connection on behalf of the card but always ignored them.

I am actually very lazy in maintaining bills so was always into a mess while filing my financial returns, somehow slowly and gradually I started paying all my expenses through my card and miracle happened. All my expenses were in a single place

I always keep an eye on bill and usage of the card, this way I am successful in retaining the charm of using Credit Card. And yes I am using only HDFC one and actually very happy with their services.
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Old 20th February 2010, 12:57   #373
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I would certainly defer on your point, I have been using credit cards continously from the last 5 years and haven't paid a penny till yet for interest. Though got many offers like policies and postpaid connection on behalf of the card but always ignored them.

I am actually very lazy in maintaining bills so was always into a mess while filing my financial returns, somehow slowly and gradually I started paying all my expenses through my card and miracle happened. All my expenses were in a single place

I always keep an eye on bill and usage of the card, this way I am successful in retaining the charm of using Credit Card. And yes I am using only HDFC one and actually very happy with their services.
+1 here. Even I use 3 different bank credit cards and HDFC is the one that i am most pleased with. Never any wrong statements. Get to speak to a CC person in less than a minute and fantastic service.

I also agree that when you use cash for most of your purchases, who in this stressful life has the time to maintain an account of every purchase made using cash? For that single matter alone, CC purchase also helps you keep track of your entire monthly expenses. If not entire, atleast you know 80%-90% where your money is going. Depending on that you can design your future months spends.

Having said that, it is a fact that if given a chance every individual would like to "own" and use a credit card. There is still a large population who is denied credit cards for reasons a plenty.

Bottomline is if you use a credit card diligently, benefits are great and risks/dis-advantages negligible
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Old 20th February 2010, 13:15   #374
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Credit cards are like sharp, double edged knives! So one can choose to shave with them, cut vegetables or cut one's own throat! If the individual is weak minded, he better not use one.

I have been using them for all my expenses for the past 14 years and I am very happy.

a) I get interest free credit for a month (not so important)

b) I need not carry cash (very important). Agreed, it applies to debit cards too, but I don't get the added benefits such as rewards points, special deals on health insurance / merchandise / free petrol and such.

c) I have a record of all (or most of) my expenses for the past 14 years, which I will not have otherwise. (Very important).

d) Gives a fillip to my cibil rating, for whatever it is worth.
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Old 20th February 2010, 13:53   #375
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Credit cards are like sharp, double edged knives! So one can choose to shave with them, cut vegetables or cut one's own throat! If the individual is weak minded, he better not use one.


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Originally Posted by Gansan View Post
I have been using them for all my expenses for the past 14 years and I am very happy.

a) I get interest free credit for a month (not so important)

b) I need not carry cash (very important). Agreed, it applies to debit cards too, but I don't get the added benefits such as rewards points, special deals on health insurance / merchandise / free petrol and such.

c) I have a record of all (or most of) my expenses for the past 14 years, which I will not have otherwise. (Very important).

d) Gives a fillip to my cibil rating, for whatever it is worth.
Photocopy of my thoughts. I must say your post sums up nuances of CC usage the best that i have seen till now. Any post after this trying to sum it will only be a repetition
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