💳 Credit Cards: Usage, Risks & Smart Practices

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<h2 class="title-scramble">💳 Credit Cards: Usage, Risks & Smart Practices</h2>
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<h4 class="subtitle-fade" data-gsap='{"from": {"opacity": 0, "y": 30}, "duration": 1, "delay": 2.5}'>What is a credit card & how I use it</h4>
<h4 class="subtitle-fade2" data-gsap='{"from": {"opacity": 0, "y": 30}, "duration": 1, "delay": 3}'>Dec 18, 2025</h4>
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### Disclaimer
|                    |                                                             |
|--------------------|-------------------------------------------------------------|
| **Personal Fit**   | Based on my experience & comfort                     |
| **Purpose**        | Educational — not financial advice                    |
| **Risk**           | Borrowing involves interest / penalty risk                     |
| **Rules**          | Verify tax/regulatory details                        |
| **Responsibility** | Make decisions aligned with your goals                     |

### Contents

1.  💳 Credit Card  
2.  🎯 Credit Card Usage  
3.  🔄 Managing Multiple Cards  
4.  🛡️ Protecting Your Card  
5.  📉 Credit Score Impact  
6.  📝 Summary

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### 1️⃣ Credit Card 💳
A **credit card** is a **payment card** from a **bank/financial institute** that lets you **borrow money** (a "line of credit") to make **purchases now** and **pay** for them **later**, up to a set **limit**.

### 1️⃣ Credit Card 💳 / Benefits
- Welcome benefits
- Cashback (Bill credit, Wallet credit, etc.,)
- Reward points on spending → vouchers (travel, shopping)
- Lounge access (India/Global access)
- Emergency liquidity (medical or short-term cash flow gaps)
- Seasonal offers & festival discounts
- Zero cost EMI or EMI Offers
- Up to 50 days of interest-free credit from purchase date

### 1️⃣ Credit Card 💳 / Examples

<br/>
Various credit cards for different use cases

Major networks accepted (Global/India)

### 1️⃣ Credit Card 💳 / How it works

- Merchants typically pay **MDR** (1–3%) to banks + card networks + payment processors 
- Banks pass ~1% back to you as cashback 
- Merchants often raise prices slightly to absorb MDR
- Bill generated monthly on a specific date (Nov 28)
- Payment due date is N days from bill generation (Dec 18)

### 1️⃣ Credit Card 💳 / Downsides
- Banks often offer credit limits as multiples of monthly income and <br/>offer LTF/FYF cards
  - Higher spending → more MDR income 
  - More chances of EMI usage 
  - Higher interest income when customers revolve balances
- Very high annual interest rates of 30 – 48%
  - Missing full payment: massive cost & credit score impact
  - Even small outstanding becomes expensive in months
- Interest applies to the entire outstanding amount from the transaction date if the full bill is not paid by due date.
- Minimum due trap: paying only minimum can keep you in debt for years

### 1️⃣ Credit Card 💳 / Suitability
#### ⚠️ Who Should NOT Use Credit Cards 
>  
If this list describes you today, avoid credit cards until habits change.

- You cannot control impulse spending 
- You don’t pay full bill every month 
- You miss due dates 
- You rely on credit for daily expenses 
- Already have heavy loan EMIs

---

### 2️⃣ Credit Card Usage 🎯
#### Where I use
- Any merchant with a card machine
- All online purchases 
- Annual & Recurring Payments
  - Insurance, mobile recharge, broadband, OTT, etc.,

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### 2️⃣ Credit Card Usage 🎯
#### Where I don't use
- ATM Cash Withdrawals
  - Interest starts immediately
- Local / Small Vendors
  - Cards often not accepted or require remote payment
  - MDR passed on to customers
- Petrol Pumps: If you buy petrol worth ₹1,000 using a credit card,  
  - Fuel surcharge (1%) = ₹ 10.00 + GST @18% on ₹10 = ₹ 1.80  
  - Total extra charged = ₹ 11.80 (1.18% effectively)
  - Some cards refund<sup>*</sup> surcharge, but not GST 
- Categories With No Reward Points
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### 2️⃣ Credit Card Usage 🎯
#### Smartphone, Smartwatch & UPI
- Credit card can be linked to devices
  - Example: Samsung Wallet on Mobile/Watch
- Rupay cards can be linked for UPI payments
  - Payment done via UPI but from credit card
- Some Credit Card have UPI id
  - Which can be used to pay Credit Card bill

---

### 3️⃣ Managing Multiple Cards 🔄
- All cards synced to same billing date as **28th** of month 
- Easy to track + pay all together on **1st** of month
  - Pick a cycle that sits just after your main salary credit date
- Add-on cards 
  - Increased total spend → better rewards
  - Usage isolation
  - Lounge Access for family members
- Track points expiry 
- Debit cards are rarely used, mainly for ATM withdrawals

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### 3️⃣ Managing Multiple Cards 🔄
#### International Card Usage
- Forex markup fee on foreign currency transactions
- Low-forex/no-forex credit cards for international spends,
  - Typical debit/credit cards: 3.5% + 18% GST (= 4.13%)
  - Low Forex cards offer: 2% or 0.99% + 18% GST
  - No Forex cards offer 0% and hence no GST
- Prepaid Forex cards for any cash withdrawal 
  - Markup + Currency conversion + GST applied upfront
  - No forex markup fee per transaction
  - Lounge access in international terminal in India
---

### 4️⃣ Protecting Your Card 🛡️

#### 🚫 Transaction Declined

| Date | Amount&nbsp;₹ | Attempted Transaction | Result |
|------|------------|----------------------|--------|
| Feb 22, 2024 | 1,829.33 | International&nbsp;Contactless | Declined |
| Feb 24, 2024 | 1,917.30 | International Online | Declined |
| Mar 05, 2024 | 1,916.01 | International Online | Declined |
| Mar&nbsp;20,&nbsp;2024 | 1,924.17 | International Online | Declined |

#### 🛡️ Why This Was Good  
-  
These were **fraudulent transactions**
- 
International usage was **disabled** & No money was lost
-  
Card settings **automatically protected** the account
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### 4️⃣ Protecting Your Card 🛡️ 
#### Things to follow
- Set lower spend limit as required
- Turn off International spending when not in use
- Set Limits on Merchant Pay, Tap and Online
- Disable ATM
- Avoid handing over card, 
  - Ask them to bring machine
  - Or you go where the machine is
- Credit cards offer built-in protection;  
fraudulent transactions can be reversed by the bank.

---

### 5️⃣ Credit Score Impact 📉

||
|-|
|**Why it matters?**|
|Cheaper loans, Higher limits, Premium cards & faster approvals|
|**Impact of late payment**|
|Credit Score **drop** (–50 to –150 points or more)|
|Marked as **30/60/90+ days overdue**, stays **7 years**|
|Payment history = **35% of score**|
|**Protect it**|
|Pay on time (Manual/Autopay) + Never carry balance |
|Keep credit utilisation low (ideally <30%)  |

---
### 6️⃣ Summary 📝

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💡 Earn rewards on spending
</p>
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💰 Spend only money you already have
</p>
<p data-gsap='{"from": {"opacity": 0, "scale": 0.5}, "duration": 1, "delay": 4.5}'>
✅ Pay <strong>100% of the bill</strong> every month
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🎯 Rewards work only when debt isn't carried
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</div>

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