Engineer's Finance

A friend of mine asked me this question, I wanted to reply back to him over mail but later I thought many might have similar question so I posted over here. I won’t be giving you the exact financial institution or bank to apply for and I don’t want to advertise on anyone’s behalf. I think all the credit cards have their own way to pulling the money from you, however smart you are. If you think you could beat them then I am sorry to say that you are wrong. It is not impossible to beat them in their own game but it is not worth the effort.

The banks and other financial institutions generally provide the much needed security and also the various features that are unique to the card. But they charge you for the services that they provide you with in some way or the other. If you are an IT professional then I would suppose you would use the card for booking train or bus or air tickets, booking movie tickets, paying various bills like electric, mobile and similar utilities, paying premiums, purchasing petrol/ buying various stuff online and also in the stores. For these purposes I don’t think you need a very feature rich card which has very high credit.

I manage all these with my credit card with the credit of Rs.30,000, the bank officials keep pestering me to increase the credit limit but I don’t generally do that. I prefer to keep it low for the only reason that I believe the credit limit should not be more than my salary any time. It is both advantageous and disadvantageous, but I am happy having a lower credit limit card. It is upto the banks to decide your limit but when they give you the card just ensure that you choose your credit limit. The chances of bank increasing the credit are low but decreasing the credit limit is very high. The banks do that frequently, if you are not worthy.

You may be pestered daily by some credit card tele-executive informing you of a feature rich card and they will promise you to get one without any hassles but when it comes to issuing the credit card, the bank then decides on various criteria as to whether you should get the feature rich card or some ordinary card, most of the times you end up getting ordinary card cause of the purchasing power and earning capacity. I had opted for diamond card and I got silver card, it happens since bank knows what to give and what not to, it is not decided by you or the tele-marketing executive.

My suggestion is, apply for a credit card with the bank in which you have your salaried account, it gives you an advantage to upgrade or downgrade your card depending on your wish. If you are a Citibank customer then I am sure you would get all the features online, it is the American way of doing business. I can do everything online and I have not visited once a bank to do any transaction. If you want it that way then I would suggest you to have one in the same bank. Many don’t prefer Citibank as the ROI is very high and they just try to suck money out of you. Truth is every other bank does and I don’t differentiate the banks in this regard.

I would suggest you to go for one platinum or gold credit card as they have many features, one thing is that some cards don’t levy any service charges while you refuel your vehicle at the petrol bunk, this is always around Rs.5 and if you use your bike/car regularly and keep refilling the fuel at regular intervals say 4 times in a month then in a year you would pay Rs.240 annually, it might look meager but it matters, if you start losing money like this with 4 such vendors then you will lose Rs.1000 approximately annually, so you should not be paying extra for using the credit card, these days I have noticed that many vendors actually charge some money extra for using the credit card. Why I prefer you to have a feature rich card is for the obvious reasons that you get with it instead of a silver card and also it is in a way better to get loans in the banks, if you have a platinum card that means you are in the elite group of people who can be trusted with the money and you can be given credit without any second thoughts.

If you look for future benefits then go for the best cards available, I am sure that not many get such an option but if you can be in the elite group be in the elite group.