Smart money: Use supplementary credit cards to avail maximum benefits

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If you're someone who makes smart money moves, then you know credit cards are primarily used for convenience, and not as a source of credit. After all, it’s the most expensive type of credit. 

But, there are benefits as well such as the supplementary credit card. Supplementary or add-on credit cards are additional credit cards under the primary credit card to be used by the primary cardholder’s spouse, parents, siblings and children above 18 years. Also, it provides the same benefits as by a primary card, without the responsibility of repayment, as all the transactions are billed to the primary cardholder. 

This makes the supplementary card a very effective tool for the family. Navin Chandani, chief business development officer, says, “People without a credit card, or those unable to get one due to lack of credit history, or are unqualified to apply for one, such as students above 18 years, or non-working family members, or retired parents, can now have a secure line of credit. This gives them financial independence.”

Also as Sahil Arora, vice-president and head, payment products, says: “Add-on credit cards help in earning rewards points faster, as the transactions by add-on cardholders are billed to the primary cardholder. This can also help the primary cardholder reach his spending threshold quicker, where certain benefits such as annual fee waiver, etc. are tied to the pre-determined thresholds.” According to Ranjit Punja, chief executive officer and co-founder, CreditMantri, it is also a good way to track spending, especially of children. It can also lead to improvement in the credit score, if paid on time. 

How do they work: The bank will treat all the accounts as a single account. So, if your primary card limit is Rs 5 lakh, each supplementary card is likely to have a similar limit. However, it doesn’t mean you can’t change the supplementary card’s limit. Kumar says: “As a primary cardholder, you can choose to set a credit limit separately for the supplementary card(s), within the limit of your primary card. Note that the total limit applicable to all cards combined is the total credit limit on the primary card. So, if you have 1 primary card with a limit of Rs 2 lakh, you can choose to have up to three-four supplementary cards, with the total limit on all cards adding up to not more than Rs 2 lakh.” Sub-limits can be set even on the ATM cash withdrawals.

Cost: It varies from bank to bank. Some banks may offer up to three supplementary cards free. Chandani adds: “Usually, it is between Rs 125 and Rs 1,000, or more, depending on the type of card. However, issuers may offer free supplementary cards as a special scheme or offer.” Sometimes there can be an annual fee on the supplementary cards, which varies from lender to lender.

Details to keep in mind: Punja says: “It’s advisable to set a low credit limit for supplementary cards. Also, make sure to check your statements regularly for both the cards to pay the bills on time, which would require an extra effort. Moreover, the supplementary cards could also come with an annual fee, which could be more than the rewards you earn from the card. So, make sure to check the annual fee before applying for the card, or go for a lifetime free card.” This means if you are smart with money, and know that a credit card is a tool for benefits and convenience, and not to depend on as a source of credit, it is a good option.

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