The importance of credit cards often is understated. This is a nifty instrument that has changed the way you make payments now and allows you to easily get started with your journey of financial freedom. Using credit cards may be rewarding. Read on to know 11 reasons how credit cards can help you –
Contrary to popular opinion, credit cards like HDFC moneyback credit Card or SBI rewards are not inherently a bad deal for finances. Using a credit card responsibly can assist you in boosting your finances or financial standing. Read here about Doji candle.
Rewards
When regularly used, credit cards can provide you with a range of rewards. Such rewards are generally in the form of reward points, cash backs or airline miles based on the card type you are using. For instance, you can save plenty by using a travel-linked credit card in the form of airline miles, reward points or cash back.
Welcome bonus
At times, you may save when you first avail of a credit card in the form of a welcome bonus. Such bonuses may be in the form of free tickets to movies or flights, events, discount vouchers or even gift vouchers.
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Buy now & pay later
All credit cards have an interest-free period that ranges anywhere between 22 days and 52 days. This permits you to use the card to buy services and products and pay for all of them later. Also, during financial emergencies, you can simply swipe your credit card to make the payment instantly. You can either pay the swiped amount through a credit card during an emergency in lumpsum by the due date or convert the same into serviceable EMIs if the swiped amount is more than your repayment capacity.
You must avoid paying just the minimum due amount on your credit cards. This is because credit card issuers tend to charge finance charges on the remaining unpaid amount. If you make this a habit, then you may unnecessarily accumulate a huge outstanding balance on your credit card. Thus, always ensure to make full credit card bill payments by the due date.
Here’s how this works – Suppose on your credit card, the interest-free period is of 52 days from the beginning of the billing cycle. Owing to this interest-free tenure, if you use the card to buy a service or product on the very first day of the new billing cycle, you will have to repay the borrowed sum by 51 days.
Insurance coverage
Few credit cards have insurance coverage features. Based on the credit card you select, you might be eligible for personal accident insurance, purchase protection insurance or both. Note that, you do not require paying any insurance premium. Thus, before you select the HDFC credit card apply option, or SBI credit card apply option or apply option for any other credit card, ensure to go through their insurance coverage.
Access to exigency funds
Most credit cards permit you instantly to take up a small loan against the credit card limit assigned. This can assist when you need the funds for an emergency. Want to know the best part? The process is extremely straightforward and ideally takes just a few minutes.
Helps build a credit history
When you place an application for a loan, one of the major metrics that banks look at is your credit score and credit history. If you have a long history and a strong credit score, then you may get favourable loan terms and conditions. A credit card endows a way to form a credit history as well as enhance your credit score. All the transactions that you make using your credit card involving repayments and purchases are reported to the credit rating companies, which use them to compute your credit score and your behaviour towards credit. All timely repayments done consistently over the years help increase your credit score.
Instant digital transactions
You can use credit cards for your digital payments. All online shopping sites accept credit cards as a payment form. Digital transactions are far more convenient and faster than transactions done using cash.
Security and safety
In case you are still wondering why you require a credit card, you can make highly safe and secure transactions online using credit cards. In case of offline transactions, you must create a secure 4-digit PIN linked to your credit card to authorize the payments. Likewise, online payments require a one-time passcode or OTP, which is sent to your registered number. Thanks to such multiple security steps, it is extremely tough for unauthorized individuals to use the card.
Allows you to manage your finances
Credit cards can assist with financial management as well as form wealth over the long term. Every transaction through a credit card gets logged, and the statement of your usage is sent to you every billing cycle. By going through your credit card statement, you can easily track your expenditures and curb your spending.
Works universally
In case you are a constant traveler, then you should buy a credit card right away. One of the major advantages of a credit card is it can be utilized virtually anywhere in the globe to make transactions. It single-handedly removes the requirement to convert cash every time you travel.
EMI plans
Many think credit cards are only another way of making payments. However, you can use the credit card to convert your big-ticket transactions into smaller as well as manageable EMIs. Using the balance transfer option on your card, you can easily consolidate your debts as well as lower the impact of huge interest rates.
Frequently asked questions about credit cards.
Is applying for a credit card a prudent idea?
Yes of course. Applying for a credit card is the best financial decision you can make. This offers a lot of advantages if you responsibly use it. Also, it assists you in managing your finances well.
What are the benefits of opting for a credit card?
Three of the crucial benefits that you can enjoy by availing a credit card are it provides you with the potential to purchase now and pay for it later, provide various reward points and cashback offers and has the potential to build as well as ameliorate your credit score and history.
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