Credit Card Secrets: Tips Banks Don’t Want You to Know

Credit cards are useful for handling your expenses, improving your credit score, and getting rewards like cashback or points. They can make payments easier and help you track your spending. But in India, credit card companies don’t always share all the important details clearly. Knowing these hidden facts can help you make better use of your card and avoid common mistakes.

Banks Rely on Interest and Fees for Revenue

Banks often advertise credit cards with cashback, discounts, and reward points. But in reality, their main income comes from the interest you pay when you don’t clear your full bill, and from various hidden fees.

• Avoid Paying Interest: If you don’t pay your full credit card bill by the due date, the bank will charge you high interest—sometimes over 40% per year. To stay safe, always pay the total due amount, not just the minimum.
• Check for Hidden Fees: Many cards have extra fees like annual charges, late payment penalties, GST, and charges for using the card abroad. Before applying for a card, check all these details. Pick a card that suits how you usually spend—for example, shopping, fuel, or travel—to get the best value.

Introductory Offers Have Expiry Dates

Banks often give exciting benefits like welcome bonuses, free gifts, or 0% interest on EMIs to attract new users. But these offers are only for a limited time.

• Read the Fine Print: Always check when these special offers will end. After that, the regular charges like interest or fees will apply, which may be much higher.
• Use Smartly: If you’re using a 0% EMI plan or enjoying an interest-free period, try to repay the full amount before the offer ends. Otherwise, you might have to pay high interest on the remaining balance.

Reward Points May Expire or Be Limited

Many Indian credit cards offer reward points, but the benefits may not be as simple as they seem.

• Expiry Policies: Most cards don’t offer lifetime validity. Your reward points might expire after 2 to 3 years if you don’t use them in time.
• Redemption Restrictions: Some cards only allow you to redeem points for certain products, vouchers, or services. You might not be able to use them for things you actually want.
• Earning Caps: Some cards put a cap on how many points you can earn in categories like fuel, utility bills, or insurance payments. This means you may not earn rewards on all your spending.

Paying the Minimum Amount is a Trap

If you pay just the minimum amount shown on your credit card bill, the remaining balance keeps building up with high interest. This can lead to a big debt over time.

• Pay the Full Amount: To avoid paying extra interest, always clear the full outstanding balance every month. This way, you can enjoy the benefits of a credit card without falling into debt.
• Know What You’re Paying: Look at your monthly statements carefully. They show how much more money you’ll end up paying if you keep making only the minimum payment instead of clearing the full bill.

Credit Utilisation Impacts Your CIBIL Score

The amount of credit you use compared to your total limit is called the credit utilisation ratio. This is an important factor that banks look at when checking your credit score.

• Try to Keep It Under 30%: If you regularly use more than 30% of your credit limit, it can reduce your CIBIL score and make it harder to get loans in the future.
• Use Multiple Cards if Needed: To keep your usage low, you can divide your spending across different cards. This helps maintain a good ratio and keeps your credit score healthy.

Balance Transfers Aren’t Always Free

Moving your outstanding balance from one credit card to another can help you pay lower interest for a short time. However, this offer often comes with some extra costs.

• Be Careful About Fees: In India, banks usually charge a balance transfer fee, which is around 1% to 3% of the amount you transfer. This means you’ll still pay some money upfront.
• Limited Tenure: The low interest rate you get is usually only for a few months. After that, normal high interest rates apply again. So, use this option only if you’re sure you can repay the amount within the offer period.

Credit Cards Offer Stronger Purchase and Fraud Protection

Credit cards in India usually give you better safety and protection than debit cards, especially during online shopping or fraud cases.

• Limited Loss in Case of Fraud: If someone misuses your card and you report it quickly (usually within a set time), most banks won’t make you pay for those charges. This is called zero liability.
• Extra Insurance Benefits: Some premium credit cards also come with free travel insurance, protection if your card is lost or stolen, and even cover for items you buy in case they get damaged or stolen.

Too Many Applications Can Hurt Your Credit Profile

Every time you apply for a credit card, the bank checks your credit report through a process called a "hard enquiry." This gets recorded in your CIBIL report.

• Avoid Applying Too Often: If you apply for many credit cards in a short time, your credit score may go down. It can make you look like someone who is desperate for credit, which banks see as risky.
• Be Smart While Applying: Before applying, use the eligibility checker available on most bank websites. It tells you whether you qualify without affecting your credit score. This helps you apply only for the cards you have a good chance of getting.

Crossing the Limit May Lead to Fees and Penalties

If you spend more than the credit limit given on your card, the bank may charge you extra fees called over-limit charges. These charges can be quite high and may not be clearly visible until you check your bill.

• Set Alerts: To avoid this, turn on SMS or app notifications to get alerts when your spending is close to your card’s limit.
• Ask for a Limit Increase Wisely: If your income has gone up or you’ve been paying your bills on time, you can request the bank to increase your limit. But don’t use the higher limit as a reason to spend more than you actually need.

Many Cards Offer Hidden or Overlooked Perks

Some credit cards in India come with free perks, but many people don’t know about them or forget to use them.

• Free Airport Lounge Access: Some credit cards, even the mid-level ones, give 2 to 4 free lounge entries every 3 months. This is possible because of partnerships with Visa, Mastercard, or RuPay. You just need to show your card at partner lounges in airports.
• Fuel Surcharge Waiver: Many cards remove the extra fee (surcharge) you pay while filling petrol or diesel. This is usually valid for spends between ₹400 and ₹5,000 per fuel transaction at select petrol stations.
• Dining & Concierge Services: Premium credit cards offer special dining discounts, help with restaurant bookings, and even personal assistant services like planning events or booking tickets in advance.

Conclusion

Banks don’t always explain everything clearly about credit cards, but if you know how they work, you can stay in control. When used smartly, credit cards can be very useful. They offer benefits like cashback, travel rewards, better credit scores, and easy payments.

To make the most of your card, always read the terms and conditions carefully. Keep checking for any changes or new offers from the bank. Most importantly, use your credit card as a tool to manage your money—not as a way to borrow money you can’t repay.