I have a credit card and I use it as a funnel to make all my payments through it (approx 15k per month), and at the end of the month, I settle the bill on the due date, without fail as a discipline.
Currently, the respective transaction amount remains in my savings bank account for around 50 days that earns a usual interest @ 3.5% p.a.
I was wondering how to utilize the potential of this interest-free credit period of 50 days. What should I do to reap better returns for this 50 day period compared to savings bank interest?
Having said that, the investment instrument should be of low-risk as the money would be required to pay the credit card bill after fixed 50 days. I also understand that redeeming would happen in T2/T3 days and incur in STCG. So need to plan accordingly.
Let me know if you can advice investment ideas for this case.
You can look at Liquid mutual funds. These give you the benefit of zero exit load, you can exit any point of time, you will have the funds back the next day. The returns are better than bank rates.
Since u told u try to make ur expenses on credit card, and house rent is a big part of anyoneās expenses, u can check out Redgiraffe they provide option to pay rent using CC.
Mr. Rupesh,
The idea of using interest free credit and being disciplined in paying back what you is owe is commendable. The other idea of using the allocation/provision made for a liability is not a good idea. No matter what the figures indicate.
I pay with my credit card for everything. All payouts through the credit card.
My credit card bill is generated on 13th of every month. And due date is 2nd of next month. So bill generated for payments made until 13th of a month need to be paid on 2nd of next month.
I have opened a DigiBank savings account to keep surplus cash for liquidity. DigiBank gives you 6% interest for first 1L and 7% interest for funds between 1L and 2L. So essentially, I am getting an interest approximately similar to a FD/ Debt Liquid fund without the T4 waiting period of redeeming. Also, the interest amount is fixed so it is not risky at all.
On the due date I donāt pay the credit card bill through net-banking. Instead, I choose the option - pay through debit card.
So, in this process I earn reward points twice - 1) on my credit card and 2) on my debit card. I redeem them into cash when a significant amount of reward points are about to expire.
Since the total amount of transaction on the credit card in a year is a significant number, the annual maintenance charges are waived off. So essentially, the credit card is for free. Not only that, my credit card is actually paying me back in terms of reward points redeemed into cash.
Not only this, credit card has fraudulent transaction protection, a life and accidental insurance for additional benefit.
At the end of a month, I transfer the surplus amount from my salary a/c to my DigiBank a/c to make the most of 7% interest.
I have one doubt. Iām using HDFC credit card, but I do not find any option to pay my dues through debit card. It allows either internet banking or NEFT transfer.
Could you pl explain how to pay my dues using debit card?
Maybe, it differs from card to card. I donāt have a HDFC card so canāt say about it.
Try this if it works - Add your credit card as a biller in your HDFC net banking and see if it allows āpay using debit cardā option. If it accepts payment through Debit card, it would help you earn points on debit card as well.
