How to save more by using Credit Cards

I know how the heading sounds. Like a typical debit/credit card issuing bank. But trust me, this isn't what it seems. I am talking about exploiting your bank/credit card to the limit, the same way the Banks squeeze you off your money. Tit for tat.

The idea of a credit card is that you dont have to pay for the purchase immediately, but after a 'credit' period which is usually 45-50 days at the maximum and 18/20 days at the minimum. This means that you have a minimum of 18/20 days to pay your credit card bill after the purchase (if this purchase happens to be on the billing date of the credit card). And if you make the purchase the very next day of your billing date, your credit period is maximum.

If we assume that you dont really time your purchase and it can occur on any given day of the month, your credit period would vary between 18 to 50 days. The average credit period is (18+50)/2 = 34 days.

For safety measures, I always recommend you to pay your credit card bill 2 days in advance of your last payment date (in case internet is not working, bank holidays, computer maintenance at the bank, etc.; Be careful not to delay the credit card payment even by one day as this will make you pay huge late payment charges and a high interest rate of 24-36% per annum is used for paying the pending amount and the whole idea of bank's trying to exploit you will occur.)

So your average credit period is 34-2= 32 days, approximately a month of free credit.

If you spend around 10,000 per month on your credit card bill (groceries, provisions, eating out, air tickets,etc) instead of your debit card or other cash methods, you save around (10,000* 4% p.a/ 12) = Rs.33.33 per month or Rs.400 annually. It may not seem much initially, but that 4% per annum is what you are/were getting on your savings bank account without paying for the purchases immediately using a debit card/cash/netbanking. You would obviously save more if you had more expenditure on your credit card or time your flexible purchase to the day(s) immediately after your billing date.

With RBI deregulating savings bank accounts, and Yes Bank already upping the interest rate on the savings accounts by 2%, it is in the near future that other banks will also increase the rates. In this scenario, your savings from usage of credit cards is going to only increase. 

Usually this savings is far more than the reward points one can earn from the credit card company. The reward points are usually some 1.33% for some premium card and the rewards redemption is so calculated that for every 3 or more reward points, you get Rs.1 worth of stuff. So the maximum benefit you can expect is  1.33%/3 or around 0.44%. This is next to nothing compared to the nearly ten times more 4% per annum (or greater) you can get on all the purchases made with the cash lying in the savings bank account and paying the credit card bill just before the last date.
P.S: I have been using this strategy for over 5 years and have faced no problems at all. Financial discipline is necessary to get more out of your money.
Paraphrasing the line in the book "Rich Dad, Poor Dad": Don't work for money, Make the money work for you.

Nothing is impossible

The last words of people who were executed

~ Che Guevara

~ John Wayne Gacy, before being executed by lethal injection

~ George Appel, executed by electric chair in 1928

~ Gary Gilmore, executed by firing squad in 1977

~ Robert Erskine Childers, to his firing squad during the Irish Civil War in 1922

~ James W. Rodgers, asked if he had any requests before facing the firing squad

~ Stanley "Tookie" Williams, founder of The Crips, executed by lethal injection. His executioners appeared to be having trouble with the machinery.

~ Edward R. Rulloff, the last man executed by hanging in New York state.

~ Sir Walter Raleigh, to his beheader

~ Carl Panzram, serial killer, hanged in 1930

~ Melchor Ocampo, Mexican politician, when asked to kneel by his executioner

~ Harry Morant, Australian war criminal

~ Joe Hill, after hearing his executioner say: "Ready...aim..."

http://www.buzzfeed.com/mikehayes/the-last-words-of-people-who-were-executed

Lifes' risks in the new world

Any uncertainty leads to risk. There are many types of  Risk. Many are non-financial and related to lifes' uncertainties. In a continously changing and evolving world, new uncertainties arise and the same old uncertainties have more (and seldomly, less) risk than the previous decades/generations. When the old parameters to measure risk are inadequate, inaccurate and inappropriate, how can one measure risk? Risk is always measured with respect to certainty just like dark is defined to the relativeness of light. And when certainty itself (the reference point) cannot be defined/yet to be refined, how do you measure risk? At a macro level, it is possible to say that the risk is more in the new world compared to the old world, but measuring it against another new world situation is impossible. And when risk cannot even be known accurately and measured, how can you successfully hedge the risks? Having huge exposures and open positions may have upsides even in life, but the downside risk is huge and scary.

One unique aspect about each of lifes' risks unlike financial risks are that you cannot be semi-hedged. You are either fully covered or stark naked!