Credit cards are financial instruments that let users get credit for buying goods and services. This sum, which the bank charges customers each month, must be repaid. This card which is plastic enables users to conduct transactions without using cash. We cannot deny the fact that credit cards have transformed lending in India because they have become a necessary part of our daily lives.
What are Credit Cards?
A credit card is a type of credit facility that allows you to borrow money up to a bank-set pre-approved credit limit, allowing for a cashless transaction. The credit limit is determined using various criteria, including the credit card holder’s debt, income, and credit score. Usually, these cards are made up of plastic. Credit is available for both offline and online purchases of goods and services. Bank gives customers 40-50 days to pay their bills in full. A purchase is made during this time, and the outstanding balance is paid on this day. A finance fee, which may be around 3% will be assessed to the customer if he or she goes over the deadline for this period.
Benefits of a Credit Card
In terms of personal finance, credit cards have become a necessary tool. The following are some advantages of using a credit card:
Credit score improvement
A credit score is a number that represents how well you handle loan repayment. Before approving a loan financial institutions and banks check your credit score. If your credit score is higher, more credit will likely be available to you. The factors that affect credit score include debt, payment history, number, type, and duration of loan accounts owned, as well as current credit usage.
A better credit score not only makes it easier to get loans quickly but also more affordable. The ability to negotiate for the best services is given to customers by a higher credit score. Many banks and NBFCs will offer a lower interest rate when a customer has a good credit score. Additionally, if your score is high, you have a wide range of options to select from. Therefore, getting a credit card early in your career is always a good idea so you can establish a solid credit history and later apply for a personal loan or a home loan based on your needs.
Use it as an emergency if your savings are low
One advantage of using a credit card is that it allows users to make purchases with their own money. As a result, if you don’t have much money saved up, you can use a credit card. It is useful when you don’t have enough money to cover an urgent expense or make a purchase. Furthermore, it offers a 45-day grace period for repayment. Because of this, you can manage any situation smoothly even with lower savings.
Credit card promotions and cashback offers
Customers of credit cards can also enjoy additional perks. Several discount offers, cashback opportunities, and reward points are given on purchases that aren’t eligible for other financial instruments. Numerous credit cards also come with a long list of benefits, including free access to lounges at domestic and international airports, free streaming of television over the internet, access to gold courses everywhere, and birthday rewards.
Card with a balance transfer
Several credit cards offer the option to transfer outstanding balances to another card account, even if the new card is not issued by the same bank. This will help you to pay less in interest fees that apply. Let’s say you have a credit card with a high-interest rate and a lot of debt that needs to be paid off. A credit card with a low-interest rate is an option if you want to transfer the debt. As a result, by lowering your financial stress, you can easily pay your dues.
Conclusion
If you use your credit card wisely, getting one is a smart move. In times of financial emergency when you don’t have enough savings, credit cards can be very helpful. They also offer numerous discounts, reward points, and deals for the benefit of customers. Owning a high credit score can also improve your chances of being approved for personal loans with higher borrowing limits. At last, you should think about getting a credit card but use it responsibly to get the most out of your benefits and develop good habits like timely payment of debts and wise spending control.
Jyoti is unique blend of expertise, extensive experience, and a genuine passion for credit cards positions him as an exceptionally well-suited and engaging content writer. His profound insights into the Indian credit and banking sectors have empowered him to craft numerous informative and captivating blogs.