Recently, many large retail chains in the country reported that the number of customers using credit and debit cards overtook cash buyers for the first time. From Big Bazaar to Shoppers Stop, and Lifestyle to The Mobile Store, debit and credit card payments have exceeded cash. In a market like India, where cash has always been a king, this is a significant development. After many years of the presence of credit and debit cards in the country, are consumers finally falling in love with the convenience of plastic money?

There are about 330 million debit cards and 20 million credit cards in India today. A vast majority of the debit card users, however, still use these cards only at ATMs and not at merchant stores. In some developed markets, 30-60% of the debit card customers actively use them at merchant outlets, but in India this proportion has remained below 10%.

Using plastic money can have many benefits. Say today is Friday, and I have to do some shopping at a mall over the weekend. Then being a typical Indian customer, I would go to an ATM in the evening, withdraw the money I needed (plus some extra, as a safety buffer), and take it to the mall. Instead, if I used plastic money, I would have withdrawn much less cash and spent directly at the merchant using my cards. How is that beneficial?

First, it is much safer. I don't have to walk around with a lot of cash in my purse or on my body. Secondly, I earn reward points from my bank for the purchases. You might think reward points aren't very attractive or take a long time to accumulate, but remember the cash spends get you nothing at all. Thirdly, every month my bank sends me special deals on specific merchants, if I spend with the card. It might be 5% cashback or buy one get one at half rate. Again if I spend in cash, none of the options are available. Finally, because I withdraw less cash, the money in my account earns interest for a few more days than if I take it all out at the ATM.

If we are talking about a credit card, there are two other advantages on top of all this. First, I can pay back the money not right away but 25 days later. So my money earns interest for that entire period. Secondly if I want to repay slowly and not in one go, I can do that with a credit card either in the form of staggered payments or by converting my purchase into EMIs.

Pitfalls of using cards

But these conveniences don't come without potential downsides. First is safety and security of your finances. If someone picks your pocket, you only lose the money in your wallet at that time. But what if you lose your card? The other worry is over-indulgence. If I get used to spending on cards, will I end up living beyond my means? These are valid concerns. Smart credit and debit card users know how to control these risks and enjoy all benefits of plastic money.

It begins with keeping your cards safe. Do not share details of the cards to anyone. Never share your PIN number, CVV number (on the back of the card) or other details. With recent changes in the RBI norms, every debit card transaction at a merchant needs to be accompanied by your ATM PIN. So even if someone gets hold of your card, he/she cannot use it at a merchant unless he/she also know your PIN. If you want even more safety, ask your bank for a "Chip and PIN" card. Cards with a chip on them are extremely difficult to duplicate and hence much more secure. These cards are gaining popularity in the credit cards space. Your bank will give you a Chip and PIN debit card as well if you want one.

Similarly if you are buying something using your card on internet portals, do not share the password with anyone. If you get emails claiming to be from your bank asking for your password details, never reveal it. No bank asks for it on an email. In case you lose your credit or debit card, call your bank immediately. Almost every bank offers "Zero lost card liability", meaning you don't lose any money on transactions undertaken by the card thief. You will be fully protected.

Set credit spending limits

Worried about overspending on your credit card? Set your own limits on the card, if your bank allows that. Always try to repay on time and in full. If you make a 
large purchase and are not keen on repaying in full, convert it to EMIs quickly as every bank offers much lower interest rates once you convert the credited amount into EMIs.

Cards are powerful payment tools that can bring you tremendous value and convenience. If you are smart about using them, you can enjoy their benefits without suffering the risks. So maybe next time you are going out shopping, you can avoid standing in a line at the ATM.

The author is President -consumer lending & payments, Axis Bank. The views expressed in this article are his own

An essential financial tool that must be treated with importance in one's life is a comprehensive life insurance plan. A good move during one's youth may have been buying the much-required life cover. Moving into the next phase of life, the advantage is that this very life cover can be altered to your advantage and turned into a combined life insurance plan, thus taking care of your spouse's life insurance needs too. These days, the bigger advantage is that the market offers insurance plans to suit every individual's requirements. One such option that is becoming increasingly worthy of consideration is the joint life insurance plan.

Understanding joint life insurance

A joint life insurance plan offers the policyholder the option of thinking a step ahead and making a financial provision for any form of inter-dependent alliance such as marriage or even a business partnership. These days, a convenient feature that can be added to any good term plan is that you can plan a step ahead and think of including your spouse to the same plan and turn it into a joint life plan, as and when one changes his/her single status. Moreover, some life insurance covers in the market also offer the benefit of taking such a cover with a business partner, thus providing a sense of security in business too.

Varying from insurer to insurer, joint life insurance plans can be of two kinds — either with a single sum assured or with two different sum assured. When offered with a single sum assured, the entire amount is paid upon the first death of the two insured, and the policy comes to an end. However in case of a differential coverage, the policy continues on the life of the surviving member, even upon payment of the death benefit for the first member.

Advantages of joint life insurance plan

Convenience: One of the primary advantages of a joint life insurance plan is the convenience that comes with it. With a single insurer and single policy, a joint life insurance is one of the easiest plans to manage, making it a convenient option to choose.

Furthermore with nuclear families, both partners contribute for joint mortgages, joint assets, etc. Hence, inclusion of your spouse in your life insurance plan will provide a better chance at policy management, thus fulfilling the purpose of convenience that such a life insurance plan aims to provide.

Cost efficiency: A beneficial aspect of a joint life cover is that of cost efficiency as compared to two individual life insurance covers. Since in this type of a life insurance policy the premium paid reduces after the payment of the first sum assured, this is also a more cost effective solution in comparison to having two individual life insurance policies.

Flexibility: Another major advantage that a joint life insurance plan comes with is flexibility. In this type of a life insurance policy, the insured can take a term plan and later add his/her spouse, thus turning it into a joint life plan. At the same time, in the unfortunate event of a divorce, the primary insured also has the option of excluding the second life assured from the policy.

Security: This type of life insurance cover also acts as a strong form of security, especially in case of a spouse who is not financially independent. In the event of the untimely death of the primary income provider of the household, the amount received from the sum assured can provide the much-required monetary relief. The feature of a pay out of two sum assured can also be extremely beneficial in case of couples who have children, whose future would need to be secured through the money received upon the death of the insured.

Cover for loans: A joint life insurance plan can also act as a perfect solution in case you are looking for an option that doubles up as a cover for loans. In the unfortunate event of the death of either of the spouse, the sum assured paid out can be used as a solution to cover any outstanding loan amount. Additionally, since some life insurance plans also provide the option of taking such a cover with a business partner, the money received can also help secure the business and avoid the loss of finances, in case of the death of one of the partners involved in the business.

The author is Head, technical, Bajaj Allianz Life Insurance. The views expressed in this article are his own

Q. My son had equity shares in Demat format when he was in India. Now, he has shifted to Singapore and plans to gift shares to his mother. The shares had been with him for more than three years. What will be the mechanism for the transaction? The mother, too, has a Demat account, but with a different DP. Is any tax liability involved?
— Krishan Dev Uppal

A. The shares held by your son in Dematerialised form can be gifted by him to his mother. It will be advisable for your son to execute a gift deed for the purpose and issue necessary delivery instructions to the depository so that such shares can be transferred to his mother's Demat account. The gift so made shall not have any implications under the Income Tax Act, 1961 (The Act).

Q. I served Punjab State Power Corporation Ltd as a personal assistant. I retired on July 31, 2013 on superannuation. From March 2013 to July 2013, my total saving under 80C is Rs 69,000. My son, who is serving the Punjab Government, has a PPF account in his name. His total saving under 80C will be Rs 1,00,000 (including EPF deduction, purchase of NSCs and deposit of tax saving suvidha fixed deposit for five years). Can I deposit Rs 31,000 in his (son) PPF account and take income tax rebate?
— Ramesh Kumar

A. According to Section 80C (2) (v) of the Act, in computing a total income of an individual a deduction is allowable in respect of contribution to any provident fund set up by the Central Government and notified by it in this behalf in the official gazette where such contribution is to an account standing in the name of any person specified in sub-Section (4) of Section 80C of the Act. Sub-section (4) specifies that such deposit can be made in the name of an individual, his wife or husband as the case may be, and any child of such individual. Therefore, in accordance with the above provisions it should be possible to claim a deduction for the amount of Rs 31,000 deposited in your son's PPF account.