In the latest attempt to promote cashless transactions, the Government has waived service tax on credit and card transactions of up to Rs 2000. According to the Reserve Bank of India’s report on digital transactions for the year 2015, about 50-60% of the transaction made by cards is below Rs 2000 in value. This is yet another reason for the common man to go cashless and opt for card transactions. Credit cards have a definite edge over debit cards because of the many reward points it comes loaded with and in the present day, it makes sense to use your credit card to your convenience and save money on it, now that service tax on transactions below ₹2000 has been waived off. Here are some ways in which you can benefit from you reward points.
Look for benefits on affiliated cards
If you have a credit card that is affiliated with a retailer or an airline in particular, look out for the deals on them, especially during the festival season. For instance, if you carry a store credit card you may able to save anything between 2-5% on your purchases in the form of gift certificates or reward points. This may not seem like much on its own but combined with a waiver in service tax up to the value of Rs 2000, you may be able to save anything between Rs 150-300 on a purchase below Rs 2000. Similarly, if you have a credit card that is affiliated to an airline, keep a lookout on deals offered during Christmas and New Year. Redeeming your air miles against expensive round trips this season may bring in considerable savings for you.
Check out the year end specials
Whether it is an online or offline retailer, December is usually the season when the inventory goes through an overhaul. This is therefore the season of sales. Redeeming your reward points during such sales in brick and mortar or virtual stores may help you lay your hands on stuff that you may have been eyeing for a long time.
Spend more and earn
Through demonetisation and various moves to makes to make card transactions attractive the Government is trying to get the Indian population to go cashless at large. If you opt to use your credit card for payment of your utility bills such as electricity, telephone and even insurance premiums you either earn reward points or cash back that can range from 5-15%. Additionally, you get cash back on purchase of movie tickets, electronic goods and restaurant bills. Thus, you can literally save money or get extra benefits by using your credit card regularly.
A word of caution
While the aim of the Government is to get you to go cashless, do not go reckless with your credit card usage. While there has been a 60% surge in credit card usage post demonetisation, it is not the green signal for reckless usage. Here is a list of do’s and don’ts to keep in mind for credit card usage.
Pay your outstanding amount in full
Pay on before the completion of your billing cycle
Keep a strict check on your credit card statements each month
Keep a vigil over your CIBIL score and CIBIL report to see that errors and discrepancies do not creep in it
Purchase anything on credit that you cannot afford to repay in full within the billing cycle
Let your credit utilisation (or the amount of credit you use) as against the total credit made available to you exceed 30%
By maintaining this basic financial discipline, you will be able to make the most of your card and contribute towards going cashless in this era of demonetisation.