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How to use Credit Cards Smartly?

In my previous post on Credit Cards Credit Card – SAVE while you SPEND , i highlighted, how a judicious credit card spending help in substantial saving over a period of time. In this post i will discuss, how we can increase our savings by juggling between 2 credit cards. Yeh Dil Maange More !!!

I am using the HDFC bank credit card from last 8 years & not using any other credit card as of now. Based on my research, i found that i can afford 1 more credit card without impacting my CIBIL score. Please note that if you have more than 2-3 credit cards then it shows credit Hungary Behavior which can impact your CIBIL credit score adversely so it is advisable to carry only 2 or max 3 credit cards.

Recession forced me to go ahead with Cash Back Card of Standard Chartered Bank (Please note Credit Cards of small players like Standard Chartered Bank, Kotak, ABN Amro etc comes with more benefits compared to big players like ICICI & HDFC). I will discuss more about selection of credit card and advantages of cash back credit cards in my future post.

Billing date of my current HDFC Credit Card is 15th of Month (Payment date is 5th of next month) and billing date of Standard Chartered Credit Card (SCB) was 25th (Payment date was 15th of next month). After few billing cycles i requested SCB to change my billing date to 30th (Payment date changed to 20th of next month) and they obliged happily. Point to note is that big players like HDFC and ICICI are very rigid in their approach. In past, i requested HDFC to change my billing date multiple times but despite being super premium customer they refused. They told me that billing date once fixed cannot be changed. Similar is the case with ICICI bank (I used ICICI credit card few years back and closed it due to inconvenient billing date). Small players are very flexible in their approach, which i realized late.

For my own benefit, i decided to divided my business between 2 credit cards to get maximum benefit & to save maximum during recession. All my purchases between 16th and 30th of the month are through HDFC i.e. i use HDFC credit card for 15 days from the billing date of HDFC (15th of Month) & all the purchases from 1st of month to 15th of month are through SCB credit card i.e. 15 days from the billing date of SCB Credit Card (30th of Previous Month). In short, use the credit card only for 1st 15 days from the billing date and ensure that billing date of 2 credit cards are approx 15 days apart. 

Now you must be wondering, how i am going to gain out of it and answer is very simple that by doing this i am getting an xtra 15 days credit for all my purchases every month. In these tough times of recession and high interest rate 15 days xtra credit means lot of saving.

Lets take 2 examples to understand better

Example 1:

Scenario A:  Assume i made a purchase on 5th of the month and i have only HDFC credit card. For this purchase my billing date is 15th of same month and i need to pay for this transaction by 5th of next month. In short i will get credit for 30 days on this transaction.

Scenario B: Now if pay for this transaction by SCB credit card then my Billing date is 30th of same month and i need to pay for this transaction by 20th of next month. In this scenario i will get credit for 45 days.

Therefore in Scenario A credit period is 30 days and in Scenario B credit period is 45 days i.e. Xtra credit period of 15 days, simply by juggling between 2 cards

Example 2:

Scenario A:  Assume i made a purchase on 25th of month and i have only SCB credit card. For this purchase my billing date is 30th of same month and i need to pay for this transaction by 20th of next month. In short, i got credit for 25 days on this transaction.

Scenario B: Now if pay for this transaction by HDFC credit card then my Billing date is 15th of next month and i need to pay for this transaction by 5th of next to next month. In this scenario i got credit for 40 days.

Therefore in Scenario A credit period is 25 days and in Scenario B credit period is 40 days i.e. Xtra credit period of 15 days, again simply by juggling between 2 cards.

From Example 1 and Example 2, it is clear that if we have 2 credit cards with billing dates 15 days apart then we can simply time the swiping of each credit card to get maximum credit period for each transaction. If we assume revolving credit of 50k every month for 15 days & xtra credit of 15 days on this amount then annually you can save Rs 2250 assuming 9% interest on bank FD.

Credit cards, if used judiciously can help to save a lot but only word of caution is that credit card should be used only for necessary purchases not for impulse buying else it can land us in deep mess of debts.

Disclaimer: All the examples used in above post are for illustration purpose and to simplify the subject.

Copyright © 2011-2012 Nitin Bhatia. All Rights Reserved.

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Nitin
Nitin
9 years ago

Hi Nitin,
I am also Nitin from Agra, bro I have just got my new hdfc bank credit card nd my bill cycle is 16 of every month, my card is all miles card, plz guide to me to avail max benefit from it nd is there any need to buy one more credit card if yes then which one is better. My card is life time free card.plz suggest.
Regards’
Nitin Saxena

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Nitin

It depends on your usage pattern, credit card limit, income and other factors. I request you to go through my post on this page, in which i explained how you can use your credit cards smartly for max financial benefits.

Ajay kumar Senapati
Ajay kumar Senapati
7 years ago
Reply to  Nitin Bhatia

HI Nitin,
I have civil score less.I am using one credit card and one vehicle loan.Is it
useful to improve my score?
One doubt more enquirer will effect my civil score?

Ajaya

Nitin Bhatia
Nitin Bhatia
7 years ago

Credit card help in improving cibil score provided credit utilization is under 30% and all the payments are on time. As vehicle is depreciating asset and it is low value loan therefore it impacts CIBIL score negatively. More no of “enquiry” entries impact CIBIL Score negatively.

harsha77
harsha77
9 years ago

Nitin, is the billing cycle same for all customers of a card of bank? For example, my card has 26th to 25th. If you hold the same type of of same bank, is it possible that you have the same cycle?

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  harsha77

Billing cycle is different for different bank. Bank normally fix 4-5 dates during the month and equally distribute billing dates of all customers to distribute work load. Normally billing dates are 2nd, 9th, 17th, 25th

harsha77
harsha77
9 years ago
Reply to  Nitin Bhatia

Thank you, Nitin. As you mention, only a few banks offer change of that cycles for a customer!

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  harsha77

That’s correct.

nishi kant Shekhar
nishi kant Shekhar
9 years ago

Hello Nitin,

i really need your advice over selection of Home loan from PNBHFL. i aam going to take 60 lacks loan. Till today all discussion with PNBHFL was fixed but i after going through flooded reviews against bad services and support pulling me behind.

kindly suggest which bank is better for this ?

Regards
Nishikant Shekhar
(Shekhar.nishikant@gmail.com)

Nitin Bhatia
Nitin Bhatia
9 years ago

You will not find good reviews about any particular bank or HFC. I suggest you to consider banks like SBI / ICICI Bank / Axis Bank.

Suresh
Suresh
9 years ago

Hi Nithin ,
I Suresh here have already done closure of my credit card with HDFC , last 4 months before ( I have collect my NOC from bank on May 16 -2015 ) Can you please suggest me how to increase my cibil score from 675 – above …………
Regards
Suresh

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Suresh

I can answer only after going through your CIBIL report.

Parth Patel
Parth Patel
9 years ago

Dear Sir,
I am using SBI card from 3 months and use 90% of credit every month. Should i go for one more card? My many transaction are of in USD. Please suggest me what should i do. Sir if you any card to avoid currency conversation charges.

Thanks

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Parth Patel

You cannot avoid currency conversion charges. In fact best conversion rates are offered by SBI only. You may opt for another credit card to reduce credit utilization.

MUIZ NADEEM
MUIZ NADEEM
8 years ago

Hi Nitin,

Major portion of my monthly expense goes for my house rent.
I transfer the rent to my owner’s bank account.
Is there a way that I can transfer the amount to a bank account using credit card?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  MUIZ NADEEM

No. It is not feasible.

Mahesh p
Mahesh p
8 years ago
Reply to  Nitin Bhatia

It is possible to transfer money frm cc to bank account…use airtel money, oxigen wallet, paytm as medium to transfer. ?load money on this wallet by credit card after ucan transfer it io bank acount…for info mail-prathapanimahesh@gmail.com

kamesh
kamesh
8 years ago
Reply to  Nitin Bhatia

hi nitin

now its possible in free recharge

P mahesh
P mahesh
8 years ago
Reply to  MUIZ NADEEM

It is possible to transfer money from creditcard to bank acount…use airtel money, and paytm,oxigen wallet as medium to transfer

Load money on those wallet nd u can transfer to bank ..charges applicable
First loading money u hv to wait for 3days to transfer to banks after instant.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  P mahesh

You may transfer to another wallet. Transfer from wallet to bank account is not feasible.

sandeep
sandeep
8 years ago

Hi Nitin,

Actually i had recevied the new credit cared (times card), i had used 26000 limit from 35000, but now i can’t afford this much of amount in one time, as well as i’m not getting the option for EMI, so please suggest what should i do, will it impact on my CIBIL if i will pay 5% of total amount.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  sandeep

You may discuss with bank to convert the outstanding amount into EMI. They charge a fees for same and also interest rate will be very high. Another option is to opt for personal loan and pay CC bill then pay personal loan EMI.

Sourabh Sharma
Sourabh Sharma
8 years ago

Dear Sir!

I do so many transactions from my credit card. First I transfer balance to my credit card then I make payments from my credit card to a govt. website for some registration forms. So will these so many transactions decrease or increase my CIBIL score? Please tell me!

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Sourabh Sharma

No. of transactions does not impact CIBIL Score. You should utilize only 30% of available credit limit.

Uddoy Oy
Uddoy Oy
8 years ago

Hi Nitin,

This is Uday here, I have HDFC credit card with 25K limit. for personal problem i have used till 20K even more some times. Since 8 months i could not pay off and every month pay 3000 or 4000 if minimum due amount is 1500. Unaware of me i used to full limit and every month I was paying minimum amount. What is my situation now?? how it effects my CIBIL rating??
What you will suggest me??

Thanks,
Uday

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Uddoy Oy

It will impact negatively.

uddoy
uddoy
8 years ago
Reply to  Nitin Bhatia

What you can suggest me to over come from this?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  uddoy

Before that you pull out your CIBIL report to check how bank has reported these transactions to CIBIL.

Suresh Babu G
Suresh Babu G
8 years ago

Hi Nitin, On my credit card I have taken loan, that is from my credit limit, it is around 90%, is it impacts my score? How banks updates to CIBIL?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Suresh Babu G

Yes. Reporting will depend on bank.

Keep it Simple
Keep it Simple
8 years ago

Dear sir, Is it better to have 1 higher limit card rather than 3 lower limit cards. And is it better to maintain 0 % usage than to have 30% usage. Warm regards
Abraham

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Keep it Simple

You can retain 2 credit cards with higher limit and close the credit card with lowest credit limit. Utilization of 30% credit limit and making all the payments on time is a good credit practice.

Keep it Simple
Keep it Simple
8 years ago
Reply to  Nitin Bhatia

Thank you sir. I have in the past utlized services to recitify cibil score. the only advise I get is. “pay back the remaining amount on settlement” My reply to such agencies is c’mon even I know that, why are you there to help me understand the algorithm.

kamesh
kamesh
8 years ago

hi nitin bro,

Iam using HDFC cash back car credit limit of 40,000 Rs for 9 months 30% only i was using 3 month beofre i used it for 25,000Rs and converted to emi , and even swipe for other usage and paying my stament amount 10 days before the due date will this affect my credit score

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  kamesh

No

pinnacle
pinnacle
8 years ago

hello sir,
i have two credit cards hdfc and sbi. in sbi we have balance transfer option if i transfer hdfc outstanding amount of 15000 from sbi to hdfc will it impact cibil score?
2- i have converted few purchases to emi around 15k if i close it with full payment will it impact my cibil score?
please reply me iam new to credit cards.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  pinnacle

1. No. Balance transfer will not impact CIBIL Score.
2. No but it will increase your credit utilization and you should not exceed credit utilization more than 30%

3. No but keep credit utilization in check.

Sam
Sam
8 years ago

Hi, i am using HDFC Money Back CC with limit of 35000. I am using around 25000-30,000/- limit every month but always paying it on time. will it impact my cibil score

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Sam

Credit utilization is very high. You should limit usage to approx Rs 10,500.

P T R Gupta
P T R Gupta
8 years ago

Billing cycle is dependent on what factors? Is it dependant on first transaction done using credit card? I am having HDFC Diners Club Rewards credit card with 50days credit period and 1.5L limit. Suggest me when should I do my first transaction to get maximum credit period?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  P T R Gupta

Billing cycle is pre-decided by the bank. Depending on your usage behavior you can request the bank to change the billing cycle. For more details, you can check my post on this page.

Vijay Pandey
Vijay Pandey
7 years ago

Nitin,

I was badly paying the o/s balance on HDFC credit card. Finally decided and paid off the complete balance of Rs.53000/-. Now that we’re squared, how frequently (bare minimum) should I use the card?

Regards,
Vijay

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Vijay Pandey

You can continue using your card normally provided you can pay balance outstanding on time.

Karthick Rao
Karthick Rao
7 years ago

Hi Sir, My credit score is 658 and i have 3 unsecured(Durable) loan in this two loans is going to close next month 2 of october (Last EMI), Will i be able to get new credit card with this score. because when ever i am applying card they will reject my application

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Karthick Rao

You will not get credit card with the existing CIBIL score.

Srikanth J (Shri)
Srikanth J (Shri)
7 years ago

I was settled axis bank credit card, after that my cibil score went down, if I want to pay the remaining amount now, bank will accept or not ? My cibil score will increase by this ?

Nitin Bhatia
Nitin Bhatia
7 years ago

It is at the discretion of the bank. You may ask for CIBIL Masking, Please check my following post
https://www.nitinbhatia.in/personal-finance/cibil-masking/

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