A credit card is nothing but plastic money. Usually issued by banks or other financial organizations which lends money to the credit card holders, that is needed to be paid back to the issuer in a certain amount of time. All one needs to do is to swipe the card at the retail store or the online store and that pays the amount due for making the purchase. It is a good way to pay for monthly purchases without taking a toll on your savings accounts and also helps to keep track of your purchases. Many also use credit cards to pay for insurance premiums and other monthly bills.
While many advisors ask people on a fixed income to stay off from using credit cards, but using a credit card can be much more than just convenient and also offers certain advantages than using regular money.
Here are the advantages of using a credit card:
- Lucrative cash back offers: do you often see cash back offers on online stores and even on the monthly electricity bills and phone bill payment portals? Yes, many credit cards offer attractive cash backs if you use your card to pay the bills. This is a good way to save some cash while paying with credit. In fact nearly all credit card company once in awhile offers such cash backs.
- Enjoy reward points: interestingly most banks offer reward points on their card. The way these points act is that you get a point say 2 or 3 points on a purchase of INR 100 with your cards. Then you can use these points to gather rewards or gifts from the banks website. For instance, HDFC bank offers rewards worth 2-5 points on purchase of INR 150 using their credit card.
- Credit cards offer the easiest EMI options: wouldn’t it convenient for you when making a huge purchase like TV, refrigerator or other hefty consumer goods to have an EMI or monthly installment option available? With credit cards there is availability of that option easily while banks often charge an extra fee for conversion of payments to EMI.
- Credit cards offer better safety than debit cards: in today’s times most people carry their credit/debit cards with them. But the world is not that great out there as we know, so cases of card fraud are almost a daily happening. Credit cards are safer on this front as they do not allow the holder to be out of cash in an instant, while debit cards do come with the chances of that happening. Also like debit cards, credit card payment portals with visa/master card/maestro etc. also offer password protection when making payments for added safety and to prevent credit card misuse.
Where to get a credit card?
It is usually best to apply for a card at the bank where you already hold an account as other banks would have to run checks on our monthly income, payment history etc. to know your re-payment abilities. But for the bank where you already have an account at, the process of analysis can be faster as they are already aware of your payment histories and everything else. Also with the increase of your income banks where you have an account and credit card will increase your credit limit.
But it is advised that you conduct a thorough research on credit card options and discounts, promotions and other options that are associated with credit cards as it may vary greatly from one bank to another. Some give attractive offers on movie tickets, others offer discounts on fuel refill payments and still other offer discounted process at restaurants. Also banks often levy charges on credit cards annually so it is important to keep track of that. Most cards have a waiver off for the first year of holding a credit card, while some other banks also offer life-time free cards. But we suggest that read the documents thoroughly to note if all the charges are actually being waived off.
If you already own a credit card and want to go in for a few more to get attractive offers and discounts, then consider that too many credit cards can have their own drawbacks. You may have problems keeping track of payment dates and also lost track of all the payments you have made. While it is a convenient option, having too much of a good thing can take its toll and turn out to be a dangerous thing. Especially if you are impulsive buyer than we suggest you keep your credit card amounts to the optimum levels just like sugar, you do not want to go over-board with too much credit sugar and then pay for the consequences later.