You are confused that you should own a credit card or not? What all we hear from a few people is that credit card is not safe and has many risks attached to it. It increases your expenses and hampers your savings immensely.
Is that true?
No, it’s not!
Every coin has two sides, and whenever you get elected or invited by a credit card company or bank to own a credit card, there are two sets of people with totally different sets of opinions, if you seek them. Some find a credit card a must and others the biggest mistake they had made in their life.
The first set of people are the ones who know how to manage their money and the latter are the ones who are vice-versa or defaulters, and by not accepting their mistakes and unplanned expenses via a credit card, they simply blame the card companies for their product.
Let’s go into a little depth and find out the benefits of a credit card, which will help you decide, should you own one or not?
Advantages of Owning a Credit Card
Simplest Unsecured Loan
When you make a payment via a credit card, money is not taken from your account rather you take on a short-term loan on the card issued to you. Generally, this loan or amount spent monthly does not amass interest if payments are made timely as per your card due date for which monthly statements are shared with the customers in advance. You usually get an interest-free grace period to make the payments.
Credit Score Builder
Credit Cards helps you to build credit score, in other words, if your payments record is clean and you clear all the card dues timely you build trust in the eyes of the government, especially financial institutions and it gets easy for you to get any sort of loan, personal or business and lucrative rate of interest.
In the long-term, if you use a card and make the payments timely, your credit score ratings improve and you can qualify for bank loans with faster approval and you can even negotiate on the processing fee if you hold a good score.
Cash Back and Savings
If you own a single card or card of various banking institutions, you can get benefitted from discounts offered time-to-time by various online sellers and you can save handsomely on your online purchases.
Online stores offer discounts and cashback to credit card users during the festive season and promotional days to maximize their sales which can be quite lucrative as the discount or cashback ranges anywhere between 5-15%.
You get rewarded for using a credit card and the money you spend through it for making purchases, paying bills, etc. etc. These accumulated reward points can be later redeemed through discount coupons, gifts, and other attractive offers.
Security on the Go
A card adds to your personal and family security as you don’t have to carry cash all the time with you, instead, you have plastic money which makes your money handling a lot simpler and easy and that too 24×7, 365 days a year. In short, you carry the peace of mind while carrying a credit card. If at all your card gets lost, you can get it blocked immediately by informing the issuing bank and free yourself from any liability.
At times, when you have an immediate requirement of money or an emergency and your budget doesn’t allow you to spend, a credit card can come to your rescue as you always have a cash limit which is a sort of loan attached to it, which can be withdrawn from any ATM.
Depending on your relations with the card-issuing authority and credibility you can take a short or long-term loan on a card at minimal interest rate without any hassles. But remember, it’s on you to decide between a desire and necessity.
Free Insurance Cover
Many credit cards come with a free purchase protection plan or purchase insurance for a short period after you buy a product or service against theft or accidental damage. Others offer you accidental or life insurance as part of the package or against a nominal fee.
Balance Transfer (BT)
If you own than one card, you can transfer dues or balances you have accumulated from one card to another and enjoy an interest-free period while you repay it.
You can also convert your purchases or payments made by the credit card in easy monthly installments (EMI) at nominal interest rates and certain terms and conditions attached to it will you shop or pay your bills.
You can use your credit card to make national as well as international transactions or purchases with a nominal conversion fee for cross-border transactions.
Credit cards have proved themselves a boon for frequent travelers.
To get the maximum advantage from your credit card always make it a point to never misuse it and never miss a due date and make timely payments against whatever you spend using the card. Remember, if you default on one card no bank will be interested in issuing another and you will also lose on your credit rating.
Use your card sensibly and always try to pay the full amount on time by paying lesser than your total due billed amount as you will have to pay an additional amount as interest later.
When used responsibly, the benefits of credit cards are numerous, from security to earning rewards, managing monthly expenses, emergency requirements and building creditability.