"Don't use a credit card if you are poor in managing your finances". Does it ring an alarm? Many of you may heard it a million times. However, you may have a reason to worry only if you aren’t well-informed about Credit Cards. Beyond doubt, they are an efficient way to pay your bills while maintaining a record of purchases. The thumb-rule is you just have to be careful to repay the credits within the stipulated time without postponing it.
Sure enough, there’s a first time to everything, even using a credit card. Hence, you may want to know what you actually gain by going with credit cards:
1. Safety first – You might not realise this, but credit cards are safer than Debit Cards. In case of a fraud, you still have money to work with. All payment gateways have well-protected password protection to make sure your transactions are secure.
2. EMI facility – When you’re looking at big purchases, like a refrigerator, TV, washing machine, etc., and money is a constraint, credit cards allow you the flexibility to pay in monthly installments. Banks might charge an interest for the EMI feature, but when it’s a necessity, credit cards come in handy and you don't need to apply for a personal loan separately.
3. Cash-back – Quite a few banks have cash-back availability when you use the credit card for buying groceries and paying off utility bills. You might also get lucky with online shopping portals that also have similar benefits on their products and services.
4. Grace period – Most banks have a 50-day grace period to settle your dues. This is extremely helpful when you’re low on funds at the time of your purchase. It’s a good idea to keep a close watch on your resources so you don’t cross the grace period.
5. Reward points - Many banks, like HDFC, have reward points for every Rs. 150 you spend with your credit card. When you’ve made enough points, you can use them to purchase gifts listed under the rewards tab.
6. Insurance – Most credit cards feature consumer protection benefits, like Travel Insurance
, rental car insurance, product warranties that sometimes exceed the one provided by the manufacturer. Make sure you learn everything about your credit card to get the full benefits out of it.
7. Universally accepted – Credit cards are more widely accepted than debit cards, especially when it comes to services, like renting a car or booking a hotel room. The reason behind this is that it’s easier for them to charge customers for any damages to the car or room. Even when you’re traveling abroad, not everybody accepts debit cards.
8. Frequent-flyer miles – If you’re a frequent flyer, you know exactly what we’re talking about. So every time you buy your tickets using a credit card, you’re adding points which can later be redeemed for your personal air travel.
Credit cards are more flexible than debit cards and other modes of payment, provided you use them responsibly. Though some of us live in a constant fear of abusing it, credit cards are safer and offer benefits that don’t necessarily come with debit cards. Once you understand and take responsibility of your finances, you’ll learn that it’s not as terrible as it appears to be initially.
It’s never too late to make the switch to a credit card and see how purchases can be an easy-breezy experience. Just remember to pay off your dues before the last date, though you do have the grace period to fall back on. However, let’s not make that a practice of waiting till situations take a turn for the worst. You’ll also get disciplined in managing your finances better which is always good in the long run. Perhaps, it’s time to start using your credit card with confidence.