Fixed Expense Management Salary Hacks

How using a Credit Card [carefully] can increase your Salary!

Credit Card is one of the best financial instrument if used wisely and requires a good financial discipline. If not used wisely enough, it can lead to vicious – debt trap cycle , which takes a lot of effort to correct.

But keeping the Bad things aside, Credit Card is one of the best building blocks you can use to increase the money you earned and get the best out of it. In this article, we will cover the do’s on how you can use the Credit Card in an optimum way to boost your salary! .

A Brief guide on Increasing your Money using Credit Card

  1. Make all purchase using Credit Card as much as possible

    Credit Card companies give an interest free credit cycle from 30 days upto 90 days, depending on your credit card. Thus this is like an Interest free loan, so the plan is to spend this money on purchases while investing / saving our money to earn interest

  2. Save your Salary Money (Cash) in Debt Funds / Better Savings account

    While you are spending company money without an interest, you can invest your own money – salary in a debt fund or a savings account and earn interest from it!
    This Interest you earn is simply your extra earnings!

  3. Bonus – You Earn Reward Points on Credit Card Spends

    Another, plus point on using a credit card are its rewards and bonus points. This is exclusive from the above benefit of free interest money during the credit cycle.
    For example : a spend of 20,000 rs a month on HPCL branded cards gives Free fuel of Rs.500 . Sweet deal isn’t it, extra savings of Rs.500 besides the interest.

Demonstration of Earning using a Credit Card

Suppose, we take purchases/spends of Rs.20,000 a month which you were doing via bank account being switched to doing it via a Credit card . 
Assuming you earn minimum 1% of Credit card redemption points , which may even go higher upto 5% depending on your card/type spending pattern.

On doing the calculations, as shown in the below image for a 30-day interest free cycle/30-day savings we earn around Rs.100 per Rs.20,000 or roughly 0.513% of return. 

Minimum 100 Rs of Savings for Rs.20000 to a Credit Card

Now, Rs.100 per Rs.20,000 may seem like a small amount. But at the end of the year it translates upto Rs. 1235 (on 5% interest) which is enough to pay add-on insurance premium , or pay a full year mobile phone bill .

Now you may ask which bank gives 5% of Interest rates which is covered over here – Comparison of Best Bank for Salary Account (you can earn upto 7% interest on savings Bank account by following our guide)

Besides this, the 0.5% earnings are dependent on your total spends, if you go out for dining, travel and spend frequently. The more you shop using your credit card the more you earn. 

Additional Benefits –

  • CIBIL Score Increase : Timely payments of credit card amount in the billing cycle, helps you improve your CIBIL score, which is used by banks/financial institutions while giving loans. Thus a credit card can help you build a healthy credit score, which reduces interest rates as much as 1%-2% which translates into lakhs (for home loans) , and savings of thousands for bike/car/personal loans .
  • Insured Money : Unlike the money which is there in your bank account, which is owned by you. The money you spend while using a credit card is owned by the bank/card provider, thus the recovery time in fraud transactions, refunds are processed much faster as these companies have a big legal team and resources to address the fraud transactions

Caution! The above benefits are only valid if the payment is made within the billing cycle, and you exercise financial discipline while not spending beyond your paying capacity. For full information on Financial Discipline, Debt Trap and caution on Credit card , read our article – 

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