India majorly has 3 kinds of consumers
• Who is scared of Credit Cards
• Who don’t know how to use it effectively
• Who maximise the Benefits, Power Users
I have over 30+ Credit Cards
And here are Some Practical Insights
• Who is scared of Credit Cards
• Who don’t know how to use it effectively
• Who maximise the Benefits, Power Users
I have over 30+ Credit Cards
And here are Some Practical Insights
First of all
Personal Finance is ‘Personal’
It’s absolutely fine if you use cash & UPI and don’t use Credit Cards
It’s also great if you have multiple Credit Cards and leveraging them effectively
Social Media does Influence, Don’t let anyone make you feel bad otherwise
Personal Finance is ‘Personal’
It’s absolutely fine if you use cash & UPI and don’t use Credit Cards
It’s also great if you have multiple Credit Cards and leveraging them effectively
Social Media does Influence, Don’t let anyone make you feel bad otherwise
If you’re an Expert, you can skip reading this Thread
I’ll explain in layman terms from here
I’ll explain in layman terms from here
• Anjali just started her career, her monthly in hand salary is close to ₹1 Lakh
Here are Anjali’s Average Expenses
• Rent - ₹15,000
• Bill Payments - ₹2000
• Shopping - ₹5,000
• Grocery - ₹5,000
• Cabs/Public Transport- ₹5000
• Travel (Flights, Hotels) - ₹10,000
Here are Anjali’s Average Expenses
• Rent - ₹15,000
• Bill Payments - ₹2000
• Shopping - ₹5,000
• Grocery - ₹5,000
• Cabs/Public Transport- ₹5000
• Travel (Flights, Hotels) - ₹10,000
She spends close to ₹40,000-₹50,000 Every Month
That’s close to ₹4.8-₹6 Lakh Spends Every Year
That’s close to ₹4.8-₹6 Lakh Spends Every Year
She’s smart, Instead of paying from Bank Account (UPI, Debit Cards)
She use 2-3 Credit Cards, it helps her
• Get Interest Free Credit
• Discount & Cashback
• Reward Points
• Airport & Railway Lounge
• Insurance Cover
• Purchase Protection
She use 2-3 Credit Cards, it helps her
• Get Interest Free Credit
• Discount & Cashback
• Reward Points
• Airport & Railway Lounge
• Insurance Cover
• Purchase Protection
On Yearly Basis
• She could earn 5% Value Back
• 10-20% Additional Savings
• 3-4 Free Fight Tickets
• Airline Memberships
• Free OTT Subscriptions & More
• She could earn 5% Value Back
• 10-20% Additional Savings
• 3-4 Free Fight Tickets
• Airline Memberships
• Free OTT Subscriptions & More
But what’s more important?
a) Anjali is a good actor and very disciplined with her finances
So for the transactions she made between 1-30/31st Last Months
Her Billing Date is 1st of Every Month, and Due Date is 20th
a) Anjali is a good actor and very disciplined with her finances
So for the transactions she made between 1-30/31st Last Months
Her Billing Date is 1st of Every Month, and Due Date is 20th
But she pays her Full Credit Card Bill right after statement generation
It has helped her build a Good Credit Score
It has helped her build a Good Credit Score
b) While her Bank has given ₹3 Lakh Credit Limit, she only uses the amount that she can pay back, she never overspend
Unlike many others who overuse Credit Cards, fall into the Debt Trap
Anjali was always mindful about her financials and maintained discipline
Unlike many others who overuse Credit Cards, fall into the Debt Trap
Anjali was always mindful about her financials and maintained discipline
After 5 Years, She needed a Home Loan of ₹50 Lakh for 20 Years.
So what?
Since Anjali uses Credit Cards, never missed her Payments in the Last 5 years,
Her Credit Score is Excellent
She got the Home Loan at 7.5%
So what?
Since Anjali uses Credit Cards, never missed her Payments in the Last 5 years,
Her Credit Score is Excellent
She got the Home Loan at 7.5%
But when Sumit, her colleague went to the Bank. The Bank quoted 10.1% Interest Rate because Sumit had no Credit History or Credit Score
Sumit is ‘New to Credit’ Ecosystem
So Bank can’t really know if Sumit won’t default on his loans
Sumit is ‘New to Credit’ Ecosystem
So Bank can’t really know if Sumit won’t default on his loans
You see?
Sumit is paying ₹20 Lakh Extra because of Higher Interest Rates (Since he don’t have any Credit Score)
Over ₹20 Lakh difference in the Interest Amount of Home Loan, just because of Great Credit Score?
Sumit is paying ₹20 Lakh Extra because of Higher Interest Rates (Since he don’t have any Credit Score)
Over ₹20 Lakh difference in the Interest Amount of Home Loan, just because of Great Credit Score?
Important Point - Note that these numbers are based on assumption, actual interest rate and calculation might vary depends on case to case
I’ve personally & professionally seen people not getting the best Interest Rates, Premium Credit Cards because of No or Low Credit Score
Look at this
This is the Payment History Part of Credit Report
This is mine 😛
Because Anjali is an Imaginary Character
I’ve made 932/932 Payments on Time in the Last 6-7 Years
This is the Payment History Part of Credit Report
This is mine 😛
Because Anjali is an Imaginary Character
I’ve made 932/932 Payments on Time in the Last 6-7 Years
So what else a Credit Report Contains?
• Credit Utilisation
• Payment History
• Age of Credit Accounts
• Credit Mix (Loan & CCs)
• Recent Enquiries
• Credit Utilisation
• Payment History
• Age of Credit Accounts
• Credit Mix (Loan & CCs)
• Recent Enquiries
With all honesty, this is my CIBIL Score
(CIBIL is one of the Most Preferred Credit Bureau by Indian Banks)
(CIBIL is one of the Most Preferred Credit Bureau by Indian Banks)
Back to Story
Neha is a Cousin of Anjali, she was very Impressed the way Anjali manages her money
Neha also applied for a Credit Card, started using it without any discipline
She only paid Minimum Due every month instead of full payments, fell into dangerous Credit Card Trap
Neha is a Cousin of Anjali, she was very Impressed the way Anjali manages her money
Neha also applied for a Credit Card, started using it without any discipline
She only paid Minimum Due every month instead of full payments, fell into dangerous Credit Card Trap
Not only Neha ruined her Credit Score but she also ended up draining her Savings & Investment
Note that Credit Cards comes with Upto 48% Interest, Heavy Penalties & Many Other Such Charges
Note that Credit Cards comes with Upto 48% Interest, Heavy Penalties & Many Other Such Charges
So there are millions of Anjali, Sumit & Neha in India
Many times, they are told by their parents, friends, colleagues, LIC uncle etc that Credit Cards are bad and you’ll be bankrupt if you start using them
Many times, they are told by their parents, friends, colleagues, LIC uncle etc that Credit Cards are bad and you’ll be bankrupt if you start using them
They may be coming from their experiences, but we need to learn things from our end before taking any borrowed opinion
This is very important for subjects concerning our finance & health
This is very important for subjects concerning our finance & health
So as you read
Apart from Benefits & Rewards
Credit Cards also help build a Good Credit Score that will come extremely handy when you need it the most
Read, Research & Take Better Financial Decisions, Managing your Money is as Important as Earring it
Apart from Benefits & Rewards
Credit Cards also help build a Good Credit Score that will come extremely handy when you need it the most
Read, Research & Take Better Financial Decisions, Managing your Money is as Important as Earring it
This Thread is Part of an Upcoming Series where I’ll be explaining Practical Insights of Personal Finance & Credit Cards from Beginner to Advanced Level
We’ll also Read in the Next Few Weeks
• Best 5 Credit Cards for Starters
• How to Build a Good Credit Score
• Premium Credit Cards
• Airmiles & Loyalty Programs
• Free Credit/Debit Cards for Lounge Access
• Best 5 Credit Cards for Starters
• How to Build a Good Credit Score
• Premium Credit Cards
• Airmiles & Loyalty Programs
• Free Credit/Debit Cards for Lounge Access
Bonus Thread for Advanced Users
Vistara is my favourite Airline
Vistara is my favourite Airline
Hope these Insights are Helpful
Thanks for Reading
Appreciate the RT to Educate More People
Follow @Ravisutanjani For More
Thanks for Reading
Appreciate the RT to Educate More People
Follow @Ravisutanjani For More
Loading suggestions...