PaisaLiveQnA: You may also have many questions in your mind on financial tools like credit cards. On ABPLive.com, we are answering all your questions related to personal finance where industry experts will help you in solving your financial problems. In this sequence, today we have brought some of our readers’ credit card related questions, which are being answered by Shailendra Singh, MD and CEO of Bob Financial.
Question: How does credit card skimming or phishing happen and which credit card is best for corporate employees?
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Answer: Stealing confidential credit card data offline is called skimming and stealing it online is called phishing. In case of skimming, whatever ATM or POS machine the credit card is attached to, it copies its data. Later, using this data, fraud or fraudulent transactions are carried out.
In case of phishing, credit card data is stolen through fake websites or links. These websites or merchant links are so similar to the original card issuer that the customer gets deceived. That is why it is said that credit card holders should never use their card at an ATM or merchant location without taking their eyes off it. You should not share your card’s sensitive information online with anyone, even the issuer, without trust.
Now if we talk about the best credit card for corporate employees, then it depends on what kind of card you are talking about. If it is a corporate card, then the corporate concerned would like to choose a card which has more benefits and less costs. Whereas if there is an individual salaried employee, then the option of taking this card should be based on the expenditure needs of the employee. Also, a lot depends on your life stage like single, married, married and your situation with children. Apart from this, it also depends on lifestyle like travel, dining, movies. The decision to buy a credit card should be based specifically on your income.
Question: Should we use our credit card only in emergencies or can we use it for everything?
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Answer: Any person should use his credit card judiciously while using it. Just because you have a high credit limit, you should avoid incurring extra and heavy expenses. Credit cards can be a valuable tool in building your credit profile, provided you make your repayments on time and responsibly. Along with this, credit cards also provide many types of benefits such as reward points and merchant offers which you can take advantage of.
If you repay all credit card due payments on time, then using credit card for all your purchases can be a good and wise choice. However, if you fail to make the full payment at the time of emergency or due to any reason, still ensure that you pay at least the Minimum Amount Due (MAD), that too before the payment due date. After this you can convert the remaining amount into EMI. This will help you to be free from interest cost and will also maintain consistent payment discipline.
Question: What are the ways to improve CIBIL? How can CIBIL be improved with the help of credit card?
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Answer: To create a good credit profile, it is most important that you are financially disciplined, the indicator of which is a good credit score. Customers should choose different types of credit. You can achieve good initial payment record through secured (home loan) and unsecured (personal loan, credit card). If you do not have a credit history, then this loan or card can provide you with a good credit record even with a low limit. Credit cards can especially help you build your credit score because they are pre-approved credit products. For example, they do not expire after the tenure ends like traditional loans. That is why it is advisable that if you have a credit card, then do not close it, because the older the credit card is, the better your credit score will be, provided you have maintained a good usage and payment history. The customer should take special care that he does not keep the utilization of the credit card limit too high and that the payments are made on time.
Question: Which credit card would be best to buy for a middle-class family in India?
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Answer: Nowadays, when it comes to retail credit cards, the Indian customer often gets confused. A middle class family should choose a card that is easily accessible and accepted everywhere, and also offers rewards and benefits for each category. You can easily pay for grocery/departmental (online or offline), fuel, dining, movies, bill payments, travel etc.
Such families should also look for EMI options which are acceptable both before and after purchase. The EMI should be in harmony with your monthly income, which will reduce your financial burden and help you in making the payments on time.
Non-earning members of the family can opt for add-on credit cards to provide maximum credit benefits to the family. If you look at the credit cards of Bank of Baroda BoB Financial, they are available for every life stage, every situation whether entry (Easy) or premium (Eterna) and many brand specific deals like HPCL for fuel, Rail travel. Provides easy credit in collaboration with IRCTC and Snapdeal for e-commerce.
(The author is MD & CEO of Bob Financial. The views published are his personal.)
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