7 Benefits of Using a Credit Card: Pay and Get Rewarded!
Suppose you go shopping; while making a payment, you don’t have to worry about how much cash you have in your pocket. You can use a credit card and purchase with a tap. Fascinating, right? Making your purchase smooth is only one of the many benefits of a credit card.
If you want to apply for a credit card but are not sure if you should, here are the top 7 benefits of using a credit card in India. Read on!
What is a Credit Card?
A credit card is a payment card issued by banks and NBFCs. It makes online and offline transactions easier and hassle-free. Credit cards come with a pre-set limit depending on the credit card holder’s CIBIL score and income. The cardholder can use the card for payments up to the set credit limit. The cardholder can continue borrowing money from the revolving credit account and pay the entire amount on or before the due date. Or, convert the transactions into EMIs and pay the due amount over a few months’ time.
Top 7 Benefits of Using a Credit Card
The following are some of the most significant benefits of having a credit card:
- Globally accepted mode of payment: Credit cards are a globally accepted mode of payment. So, you can travel anywhere without having to worry about how much cash is left in your wallet. It also minimises the risk of theft by a significant amount.
- Turn repayment into EMIs: While there is the freedom to make a purchase using a credit card without worrying about affordability, one cannot exceed the credit limit. That said, you can convert high-value purchases into EMIs to make the repayment easier.
- Interest-free repayment: The best part of paying through a credit card is that while making repayment, there is no interest levied on the borrowed amount if you pay all outstanding dues before the credit-free period ends. This credit-free period usually ranges from 40 to 45 days. After this duration, there will be interest applied to the amount.
- Rewards and cashback: This is another alluring benefit of having a credit card. There are significant cashback and rewards on some of your favourite restaurants, shopping apps etc. There is also a waiver on fuel surcharge in various petrol pumps across the country.
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- Credit score: Credit cards can be of good use if you know how to make the repayment within the due time. If you make the repayments on time, it can enhance your credit score. A good credit score will help you avail of loans quicker and easier in future and will also increase your credit limit.
- Expense tracker: While you spend your money through cash payments, you might lose track of how much money you have spent. This can make your savings and keeping track of your expenses difficult. However, with credit card payments, you get all of your expenses accumulated in a statement. This will help you keep track of your expenses.
- Secure payment: While making online payments, you always have to be careful that your money reaches the receiver. In the case of credit card payments, there is multi-factor authentication and also some security features provided by the credit card issuer, which make your payments secure.
Final Word
Although there are multiple benefits of credit cards, you should never make it a habit to keep using your credit card while building debt at the same time. Also, before applying for a credit card, make sure to compare the features of different card issuers to identify the best option.
FAQs on Benefits of Credit Card
Ans: Credit free period is the period by which the credit card holder has to make the repayment to avail of interest-free loan benefits. This can range anywhere between 18 and 55 days. After which, the lender will levy an interest between 22% and 48% annually on the outstanding amount.
Ans: Going beyond your credit limit can significantly hamper your credit or CIBIL score. It will also attract an over-limit charge or penalty on the amount you have overspent.
Ans: Credit cards are not only about credit limits and repayment. There are a few other charges associated with credit cards, such as late payment fees, joining fees, renewal fees and processing charges. One should be aware of these charges while getting a credit card.
Ans: The minimum amount due is the amount you should pay to the credit card issuer to maintain your credit card account. It is a small percentage of the total outstanding amount.
Ans: Yes, you can withdraw cash using a credit card. This can prove to be beneficial when you are running out of cash and have no other option. However, there will be additional charges levied on the transaction made.
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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
