What is the best approach while giving/lending your credit card to friends/family

[the_collector]

Hello Everyone,

So, recently I've got access to cards that give good discounts on multiple platforms. So whenever my friends or family require to make a purchase that have a significant discount with one of my cards. I happily lend it to them.

My question is, what is the best approach while clearing the amounts? ( To avoid any questions or notices)

1. They gpay/ bank transfer the money to me and then I clear the card through various means

2. They directly clear the amount on my card via NB or any other means? Does not involve me receiving any funds in my account.

Also, the max amount of a single transaction is not more than 1.5L and I never accept cash.

 

[helloworld]

a word of caution (just a gentle warning for your procedure): https://www.technofino.in/community/threads/managing-all-credit-cards-we-have.2348/post-42470

everything good today, maynot be good tomorrow. so, gentle warning.

------

any method that pays to your account before "duedate - 10 days" is fine for me. the closure it is, the more trouble you will get.

Note: Its your CIBIL that impact if something goes wrong, btw.

 

[the_collector]

a word of caution (just a gentle warning for your procedure): https://www.technofino.in/community/threads/managing-all-credit-cards-we-have.2348/post-42470

everything good today, maynot be good tomorrow. so, gentle warning.

------

any method that pays to your account before "duedate - 10 days" is fine for me. the closure it is, the more trouble you will get.

Note: Its your CIBIL that impact if something goes wrong, btw.

Thanks for this,

I trust the people I give the card to and they're happy to clear / send the money to me instantly once the transaction goes through too. I also ensure I clear close to 8 to 10 days before due date

The only problem or question I have is, this will not attract a notice right? Because I generally take the payment via gpay to my account and then I clear my credit card bill as I normally would.

So my account shows high amounts debited but they're infact just there to clear the card eventually.

 

[Vasuki]

Thanks for this,

I trust the people I give the card to and they're happy to clear / send the money to me instantly once the transaction goes through too. I also ensure I clear close to 8 to 10 days before due date

The only problem or question I have is, this will not attract a notice right? Because I generally take the payment via gpay to my account and then I clear my credit card bill as I normally would.

So my account shows high amounts debited but they're infact just there to clear the card eventually.

Get via imps 🫂 .
Makes bank see u much reliable

Upi is something banks don't like yet they happy to comply bcz of Gov policy

 

[the_collector]

obviously, if its >10L in that bank they'll report your account to IT (credit card wise).

bank account, depends on your ITR and interest reported by bank to IT (bank account wise).

And again, trust me I saw many people broke that trust in worst times, that impacts you. So, again gentle warning! Ignore if irrelevant or saying multiple times, but it happened.

More worried about bank account wise because I would have to justify why I got this and all that if a notice were to come through. Which is frankly a pain.

The amount I get through is covered and well within ITR so then it shouldn't be an issue.

Also for trust , I agree with what you have to say and that's why I've kept the cap to 1L for friends, I know I can clear it if they act funny later 😅 , thanks for the heads up

So in all I take it that, gpay to my bank or directly clearing on card anything is okay as long as it falls within my ITR filed?

I always thought them clearing it to my card directly would be the best as it won't show up as an amount recieved in my bank. Payment paid via card, payment received on the same card.

 

[RAMESH BABU N]

If your friends/relatives are using your card for their purchases on a regular basis, then it is not-exactly-legal n wrong.

Avoid doing this.

I have seen many thickest friends n the best relationships turn bad on silly n stupid slup ups on financial matters.

They are important than those milestones or discounts/offers.

 

[RAMESH BABU N]

Instead of helping like this, help them in getting their own CCs in their own names.

 

[the_collector]

If your friends/relatives are using your card for their purchases on a regular basis, then it is not-exactly-legal n wrong.

Avoid doing this.

I have seen many thickest friends n the best relationships turn bad on silly n stupid slup ups on financial matters.

They are important than those milestones or discounts/offers.

Instead of helping like this, help them in getting their own CCs in their own names.

Agreed Sir, luckily they don't use it often, it's mostly just for the occasional flight offers or discounts on a purchase of a phone.

It doesn't make sense for them to get a new card for that single purchase and hence ask me to use mine.

And I don't really make anything out of them nor do I give the card to them with the intent of making something, because the most used card is ICICI or hsbc, which don't have good milestones or reward.

It's purely to help out since I hold the card anyway

 

[RAMESH BABU N]

Agreed Sir, luckily they don't use it often, it's mostly just for the occasional flight offers or discounts on a purchase of a phone.

It doesn't make sense for them to get a new card for that single purchase and hence ask me to use mine.

And I don't really make anything out of them nor do I give the card to them with the intent of making something, because the most used card is ICICI or hsbc, which don't have good milestones or reward.

It's purely to help out since I hold the card anyway

If it is occasionally, then it is OK.

 

[pothi]

2. They directly clear the amount on my card via NB or any other means? Does not involve me receiving any funds in my account.

This is the safest method for both parties.

Anyone can pay your credit card due and most banks support a direct UPI handle or using the account number with IFSC code method. Either way, when using UPI, the payment gets settled instantly. Please test it with Rs.1 transfer before letting them settle the full amount.

Occasional lending is okay (as discussed). I had to break away from a friend due to regular recurring usage that kept increasing due to strengthening of USD. As the amount was less than 2k. I let it go for a peace of mind. I still use a cousin's card for occasional purchases. Gives me a reason to talk to him at least once in a while. Otherwise, both are busy in our own world.

 

[the_collector]

This is the safest method for both parties.

Anyone can pay your credit card due and most banks support a direct UPI handle or using the account number with IFSC code method. Either way, when using UPI, the payment gets settled instantly. Please test it with Rs.1 transfer before letting them settle the full amount.

Occasional lending is okay (as discussed). I had to break away from a friend due to regular recurring usage that kept increasing due to strengthening of USD. As the amount was less than 2k. I let it go for a peace of mind. I still use a cousin's card for occasional purchases. Gives me a reason to talk to him at least once in a while. Otherwise, both are busy in our own world.

Thanks , I think I'll stick to option 2, they can pay via Amazon or gpay themselves too.

Again yeah, I only lend it out for occasional purchases( max 2 or 3 transactions in a month ) to friends and family that ask

 

[rp0703]

Hello Everyone,
So, recently I've got access to cards that give good discounts on multiple platforms. So whenever my friends or family require to make a purchase that have a significant discount with one of my cards. I happily lend it to them.

My question is, what is the best approach while clearing the amounts? ( To avoid any questions or notices)

1. They gpay/ bank transfer the money to me and then I clear the card through various means

2. They directly clear the amount on my card via NB or any other means? Does not involve me receiving any funds in my account.

Also, the max amount of a single transaction is not more than 1.5L and I never accept cash.

I would suggest you to open separate account and take money in that money and pay your cc due from the account. Also keep details of each transaction your friend and family did using your cc. Problem with option 2 is that cc spends are in your name but in your bank there's no outflow of funds to pay cc bills.

 

[hema220]

Hello Everyone,

So, recently I've got access to cards that give good discounts on multiple platforms. So whenever my friends or family require to make a purchase that have a significant discount with one of my cards. I happily lend it to them.

My question is, what is the best approach while clearing the amounts? ( To avoid any questions or notices)

1. They gpay/ bank transfer the money to me and then I clear the card through various means

2. They directly clear the amount on my card via NB or any other means? Does not involve me receiving any funds in my account.

Also, the max amount of a single transaction is not more than 1.5L and I never accept cash.

keep proper record of credit card usage and money recieved. Don't take any money by cash.

 

[the_collector]

I would suggest you to open separate account and take money in that money and pay your cc due from the account. Also keep details of each transaction your friend and family did using your cc. Problem with option 2 is that cc spends are in your name but in your bank there's no outflow of funds to pay cc bills.

its two edge sword for OP.

- can't spend 10L on card account because they report to ITR.
- can't accept money because they ask 'how this money came to account'.
- can't tell them to pay itself because then has to explain spending part without income.

once or twice in a year might be ok, but have to worry only if some threshold crossed.

lending itself risky, now have to handle payment part..

@the_collector , if your friends paying directly to card, take a screeshot from them and keep it for future purpose (Just incase).,

In the case of option 2 , unless it crosses 10L per card per year it shouldn't be an issue right? I hold 5 icici cards ( 3 accounts) , and the spends don't cross 10L per year for sure. At max it's probably 2-3L per account per year.

But I appreciate your suggestions everyone. I still think it's best not to take money into my personal account.

I suppose maintaing a separate account just for those transactions or receiving it to card , either should be fine as long as the total spends fall within ITR reported or individual cards not crossing 10L per year

 

[hema220]

In the case of option 2 , unless it crosses 10L per card per year it shouldn't be an issue right? I hold 5 icici cards ( 3 accounts) , and the spends don't cross 10L per year for sure. At max it's probably 2-3L per account per year.

But I appreciate your suggestions everyone. I still think it's best not to take money into my personal account.

I suppose maintaing a separate account just for those transactions or receiving it to card , either should be fine as long as the total spends fall within ITR reported or individual cards not crossing 10L per year

As of today, banks will report to ITD for above 10 lakhs from single bank credit cards. It may change any time, so keep all transactions data.

 

[SSV]

Hello Everyone,

So, recently I've got access to cards that give good discounts on multiple platforms. So whenever my friends or family require to make a purchase that have a significant discount with one of my cards. I happily lend it to them.

My question is, what is the best approach while clearing the amounts? ( To avoid any questions or notices)

1. They gpay/ bank transfer the money to me and then I clear the card through various means

2. They directly clear the amount on my card via NB or any other means? Does not involve me receiving any funds in my account.

Also, the max amount of a single transaction is not more than 1.5L and I never accept cash.

Best approach is:
Set all limits to 1k on the card control settings and give it to them ...

 

[Deleted member 9785]

One day you will lose your friend and your money

 

[Abhi5467]

I also lend CC if they find some offer on major purchase like appliances, laptops, mobiles etc. Just don't do it every month, once in a while is good and make sure you take the payment before the bill due date and clear all dues. Track your spending throughout year. I've some CC and my friends have some , together the offer spectrum gets covered until I personally get the CC. It's a common practice. Instead of rejecting them, explain them the capping of purchases. I don't have any problem if the risk is managed. Friends or relatives will not ask for your CC everyday, it's usually some big purchase once or twice a year. This will happen only if they don't have that CC eventually you or them will get all major CC.

 

[the_collector]

I appreciate the concern everyone and I understand some people are speaking out of personal experience ( losing someone for a few thousands).

Losing friendship over something like this is not something I intend so I just want to clarify again, I make purchases for them rarely and for a controlled amount.

These are my close friends and relatives only and I trust them ( I interact with them almost everyday)

My original question was purely from a tax and notice perspective, I realised I was getting money from different sources into my bank and while I know what it is for, I did not want it to attract an IT notice and hence the question.

 

[helloworld]

My original question was purely from a tax and notice perspective, I realised I was getting money from different sources into my bank and while I know what it is for, I did not want it to attract an IT notice and hence the question.

No one minds about it as long as you do it within your income. You already pay tax for your income.

You'll more likely to get into IT radar if you spend more than 10 Lakhs on a single bank as it gets reported to IT.

On other hand, it also depends on your income.

If we have income of 10L and spend 5L on card in a year, again no one could ask as we do pay tax for 10L income.

But, if we have salaried income of 5L and spend 6L, that looks suspicious and might fall under scrutiny.

So, if it's just one time uses your card for 50k, it doesn't matter. Make sure you don't cross those limits.

Note: Any income that you receive in your bank account have to report and categorize properly like Interest, Dividend, Gifts etc. and pay tax accordingly, this is on paper rule.



Further Ref:

https://www.financialexpress.com/money/income-tax-on-credit-card-how-much-can-you-spend-without-attracting-tax-scrutiny-2949483/

Also, further

- It's important to who receives the money because if any notice comes that act as a deduction from taxable income on their tax return.
- If your friend does claim, then they would have problems claiming those deductions as all that expenditure would be routed through you and would not directly reflect in their books of accounts, unless sophisticated accounting is done.
- If they directly spends all this using their own bank/cards, it reflects on their books of accounts and eligible expenses can then be better deducted from their taxable income.

Hope it helps