8 Benefits of Credit Cards that Make Them a Must Have in Your Wallet
Credit Cards have now become a must-have in our lives today. It is one of the most acceptable forms of plastic money and empowers you to buy things you require in a jiffy! So, whether you want to pay for a gas bill or buy groceries or plan a trip abroad or need instant cash for buying a car, Credit Cards are as good as cash in hand. This buddy in your wallet practically boosts up your purchasing capacity.
If you have been till date reluctant to switch to Credit Card as you enjoy the ease of cash with your Debit Card even, this article is a must-read for you. Besides sharing a practical guide on using plastic cards, we have also listed 7 benefits of Credit Cards that you must know about. A Credit Card Offers you more than just the ease of ready cash.
Credit Card vs. Debit Card
If you wonder why to switch to a Credit Card, here is a quick take away on the differences between a Credit Card and Debit Card:
- Credit Card sare like a temporary loan, whereas in a Debit Card transaction, the money is deducted right away from your linked bank account. You do not have the luxury to pay it off later.
- Debit Cards cannot be used to buy beyond the amount you have in your bank account. While, with a Credit Card, you get the ease of purchasing up till the credit limit assigned to you. Your credit is not linked to your bank account, and thus, you need not maintain balance in the bank to make the purchase.
- A Credit Card entails an annual charge which may vary as per the product, while your Debit Card has a nominal charge of Rs 200-300.
- You use Debit Cards at ATMs to withdraw money from your bank account. However, the same is not true for a Credit Card. Using a Credit Card for cash entail high processing charge, and it is treated as a cash advance and acts as a card loan.
Now let’s come to the golden question: What are the benefits of Credit Cards?
Here is a quick rundown on the advantages of owning a Credit Card:
1. Earn cash back with transactions
Cashback is a bonus for spending money. And who doesn’t like receiving free money?
Every Credit Card provider has tie-ups with reputed brands to offer alluring cashback offers to the card members. For example: On monthly grocery shopping, you can earn attractive cashback offers with your Card. With the world shifting over to clicking and shopping, Credit Card companies often offer multiple cashback schemes on online purchases.
2. Reward Points
Most of the Credit Cards work on the system of Reward Points. That is, the more the purchases you make on your card, the more points you gather.
For instance, with every purchase worth Rs. 100, you may gather 10 reward points. This is just an example and differs from bank to bank. These points can be deemed to buy rewards from the cards’ rewards page, or you can also redeem them from partner websites and brands– the choice is yours!
Credit Cards reward points are usually endless and can be deemed at several places. However, you will have to understand your needs and your spending pattern to get the right reward points. So, if there’s a store that you frequently visit or a restaurant that you normally visit, make sure you assess what cards they encourage to use, and it can work wonders for your spending!
This option is extremely useful when it comes to buying expensive items. A new fridge, a 60-inch TV or any fancy gadget will burn a hole in your pocket, but a Credit Card can turn this huge expenditure in an easy-to-pay EMI method.
However, when you select the EMI option, keep in mind that interest will be charged on the total amount.
4. Frequent-Flyer Miles
Another very popular feature of Credit Cards is the Miles that you earn when you buy tickets from partner Airline companies using their Cards. Accumulating these miles can give you amazing discounts on like travel tickets and hotel booking! For people who travel a lot, this benefit can come very handy.
5. Grace Period
When you use a Debit Card, the money is debited from your account right away. However, in the case of a credit card, you can defer the payment until the due date. Most banks will offer you a grace period of up to 50 days to pay back.
6. Credit cards are safer than Debit Cards
With an increase in phishing attacks, there is a possibility that scammers may try to make fraudulent transactions with your credentials. However, with Credit Cards, there are multiple checks, and since the money is not debited from your account right away, you can always reach out to the bank and raise a dispute if you think there has been a fraudulent transaction on your behalf.
7. Some Credit Cards can be used internationally
Credit Cards make international transactions hassle-free. In case your card is restricted for domestic use only, you can ask the bank to convert it to an International Card when planning to travel overseas. In this case, you may need to pay slightly extra, but it would ultimately be much cheaper than getting another Forex Card.
8. Financial tool to better credit rating
All these benefits can help you save up to 10-20% on your monthly spends. You can better plan your spendings and build your credit score at the same time. Credit cards indeed are one of the best financial tools to boost up the score. Regular and disciplined use of Credit Cards can boost up your score and improve your creditworthiness.
Now, let us break down what are the different types of Credit Cards available:
Different types of Credit Cards available:
- Standard Credit Cards
These are the most basic cards that banks offer, and the credit limit is decided by the bank based on your salary.
- Premium Credit Cards
These will be either gold, platinum or black cards that come along with a host of benefits – concierge services or free lounge access, etc.
- Secured Credit Cards
If your credit score is not optimal, but you need to use a Credit Card, then the banks will provide these to you. Secured Credit Cards have a higher rate of interest and an annual fee too.
How to Use Your Credit Card Responsibly?
Credit cards offer you endless opportunities to buy things that are sometimes beyond your purchasing power. With a large number of spending options, it may become slightly difficult for shopaholics to stay on budget. This is a big problem with Credit Card owners, which may lead them to run into debt traps which may spoil their credit history while pushing them deeper into the debt hole.
The golden rule of using a Credit Card is remembering to spend on something where you know that you will be able to pay it back within a reasonable time frame. Remember, if you are not able to pay within the grace period, interest charges will keep on piling, and at the end of the day you will end up paying much more than what you had anticipated.
A rule of the thumb is to avoid buying items that you think you may not be able to pay off well ahead of time.Besides, you must not use your Credit Card habitually for more than 50% of the approved credit limit.
Also Read: Axis Bank Lifetime Free Credit Card
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