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Tricks Of The Trade

Features like billing cycle,reward points, balance transfer

Harsh Roongta

14 Aug 2007

There are several features of your credit card that can be used effectively to minimise your interest costs. Here's a list...

For the ones who suffer from the phobia of credit cards, there is good news. You can spend through a credit card and not fall in the interest rate trap - actually. And all you need to do is be a little smart while swiping. A few simple precautions and a little understanding of the features will help you to use your card very effectively. That is, you can use the same pool of money for different purposes at the same time. Here are a few tricks that you can use.

Billing Cycle

Every month, the bank sends you the credit card statement 'as of' on a particular date which lists down your transactions, interest costs and other charges. The statement also includes parameters like total amount due and minimum amount due. It also states which period does this statement pertain to and what is the due date for making the payment

In the banking parlance, this 'as of' date is known as 'Billing Cycle'. On an average, 20 to 22 days are offered as interest free period from the statement date and considering 5-7 days time for the statement to reach you, it effectively boils down to 15 days interest free period in which you can arrange for the funds to make the payment

So let us get a bit into ways which you can use to use the billing cycle process best. (See table below)

Cycle Date

28th Of Each Month

Interest Free Period

Transaction Date

Included In Cycle

Due Date

From Transaction Date

From Cycle Date

Oct 27th

Oct 28th

Nov 19th

23 Days

22 Days

Oct 29th

Nov 29th

Dec 21st

54 Days

22 Days

Just by postponing the purchase for two days, you have got a whopping benefit of 31 days of interest free period (54-23)!!! It means if you are buying an expensive item, you could get double the days to arrange for funds by postponing the purchase for just 2/3 days...

Isn't this amazing to know and simple to use!?

Reward Points

The second feature is reward points and redemption - Many of us feel this to be the least important item, but if you are a regular credit card user & more than 90 per cent of your monthly expenses are charged to Credit Card, you better track these points - Of course to your benefit!!

Most of the banks offer reward points ranging anywhere from 1 to 5 for every Rs. 100 spent. This again depends upon the card, the cross-selling relationship of the bank, co-branding, the merchant establishment you are purchasing from etc.

Also, they allow you to redeem these reward points against the annual fees of your card, thereby making it 'free-to-use' for you...(This doesn't apply to ICICI & HDFC - There are no annual charges in case of former and no redemption is allowed in case of latter!!)

But don't be sad if you are not redeeming your reward points for annual fees - You can still use them to purchase items from a wide range offered by the rewards program - Ranging from collectibles to watches, from paintings to accessories, from charity to food and dining & entertainment ...


Not so common feature is due- date reminder...Yes, its true - ABN Amro bank offers the facility of alert on the statement date, through SMS and E-Mail, to let you know what is the damage to your kitty and when is it hitting you!!

And ICICI bank is even a step further...They offer SMS & E-Mail alerts for 5 days prior to actual due date

Available credit limit (on utilizing up to 90% of limit or when only Rs.2000/- limit is available)

Payment receipt

And all these are totally free - Use it to the best of your advantage.

Balance Transfer (BT)

Another smart way is the use the balance transfer facility provided by many banks. Make a big transaction on your credit card get the reward points and redeem them for anything and while approaching due date, just transfer the o/s balance to your other card.

Points to note for BT

You should have adequate credit limit on the new card and the BT amt. should be within the max. limit allowed by the new card co.

There are certain one time charged levied by the new card co. for the BT facility

Certain banks provide interest free period even on BT!

Let's include all these in a hypothetical example to show you the exact monetary benefit...


New flat screen, LCD - Plasma television worth Rs. 1,45,000

Your Credit Card Details


Reward Points (On Every Rs.100/- spent)

Billing Cycle

Credit Limit






BT Provisions

75 days interest free period
Flat BT charge of Rs. 500/-

Purchasing on 29th, instead of 26th, would give you a monetary saving of Rs. 966/- (calculated @8% p.a.) due to 30 additional interest free days

2900 Reward Points can be redeemed for any of purposes mentioned above

A BT with ABC will give you a net gain of Rs. 2,055/- (calculated @8% p.a. for 75 days for a max BT of Rs. 1,25,000 -less- Rs.500/- BT charge)

Just by knowing all these features and utilising them to the optimum makes you richer by Rs. 2,521/- ! & you have a flat screen, plasma LCD TV as well!!! Not a bad deal, at all.

So next time you go out for shopping, do remember that all these little observations can make a huge difference in your payout.