One cannot deny that credit cards have transformed the nature of credit in India and how integral they are to people’s daily lives. They are convenient ways for consumers to access credit for buying stuff without having to pay immediately. This plastic card allows individuals to perform cashless transactions. Here are the many benefits that come with credit cards.
What are Credit Cards?
A credit card enables you to conduct cashless transactions by allowing you to borrow money up to a pre-defined credit limit from the issuing bank. The credit limit is determined using many criteria, including the credit card holder’s debt, income, and credit score. Credit is available for both offline and online purchases of products and services. Banks provide their customers with 40–50 days as a grace period to settle their bills. The consumer may incur a finance fee, which may be roughly 3% if the deadline of the timeframe is surpassed.
Benefits of a Credit Card
In terms of personal finance, credit cards have become a crucial instrument. Here are a few advantages of using a credit card.
Easy Access to Credit
A credit card allows users to make purchases without using their own money. As a result, if you don’t have much money saved up, you can use a credit card to continue transactions and repay within the grace period.
Wide Acceptance
Credit cards are accepted all over the world. You can use a credit card to settle bills at hotels, restaurants, shopping centres, petrol pumps, and airports. It makes shopping, travelling and eating outside highly convenient. There is no need to carry cash when you have a credit card in your wallet.
An Increase in Credit Score
A credit score is a number that represents how well you handle debt repayment. Before approving a loan, financial organisations and banks check your credit score. The likelihood of obtaining credit increases with a good credit score. The credit score criteria include debt, payment history, details of loan accounts, and current credit utilisation. A better credit score makes it easier to secure loans faster and more affordably. Customers have the more negotiating power to get the finest services when they have a better credit score. A credit card can help you maintain a high credit score. As you borrow credit from credit cards and keep repaying on time, it will impact your credit score positively. Your timely repayments will show your credibility in repaying debts.
EMI Purchases
If you use a credit card, you can divide the payment for a large purchase into many interest-free monthly instalments, or “Easy Money Installment” (EMI). There won’t be any pressure to pay back the whole sum at once in this manner. EMIs may aid in making products more affordable for consumers.
Promotional Cashback Credit Card Offers
Customers with credit cards get extra perks. Payments are eligible for many discounts, cashback offers, and reward points that aren’t accessible via other financial instruments. Numerous credit cards also provide benefits like free admission to lounges at domestic and foreign airports, free use of OTT, free access to golf courses, and birthday bonuses.
Balance Transfer Credit Card
If you have an outstanding balance on your credit card from a different bank, you can transfer it to a new credit card account. This process will help you pay a lower interest fee. Let’s say you have a high-interest-rate credit card and a lot of unpaid balances. Transferring the debt to a credit card with a reduced interest rate is a great idea as it will reduce your total repayable debt.
Conclusion
Consider getting a credit card to avail yourself of its many benefits, but you must use it wisely. To get the most rewards, develop habits like timely payment of debts and prudent spending management. You may utilise the credit card app for increased efficiency and proper credit management.