Once you start earning, you should also learn how to spend wisely. Credit Cards can help you manage transactions and spend effectively. However, credit cards have been infamous for multiple reasons.
On digging deeper, you will realise that the advantages overshadow the demerits and the drawbacks are resultant of carelessness that can be avoided by ensuring to maintain a credit balance using apps like CRED.
If you are wondering, “Why get a credit card?”, let us tell you that it is necessary as it helps you manage your finances and plan on saving while not compromising on the expenditures. Whether it is getting a gym membership, buying clothes for an occasion, travelling on holiday or investing in something, doing a transaction through credit card is always hassle-free and comes with additional benefits.
Here are the significant advantages of using a credit card.
10 Major Advantages Of Using A Credit Card
Offers You Convenience
One of the advantages of using a credit card lies in having the convenience to manage your finances and have a track of all the expenditure.
While some credit card companies send you a detailed transaction history at the end of every month, others offer the facility to check the record at the end of every year. This not only helps you to know where you are spending your money but also assists in managing taxes.
You Get Cashback Against The Transactions You Make
Unlike debit card where there is no scope of getting lucrative cash backs, credit cards offer various cashback benefits upon the online as well as retail purchases that you make.
These cash backs are segmented under 1%, 2%, 3% and sometimes almost 6% caps and are at times co-branded with various merchant sites.
Endless Reward Points To Redeem
Credit Cards offer reward points for almost everything. Reward points are the points given to the credit card holder by the bank for every purchase that they make, and once you have reached a particular threshold, you can redeem these points to make a further purchase.
For example, American Express SmartEarn Credit Card offers 10X reward points for every 50 INR spent on Flipkart, and DFC Moneyback Credit Card has a 2X reward points for every 150 INR of online transactions.
You can also convert reward points to cash, but this option is just limited to individual credit cards.
There Is Assurance
A credit card provides you with the liberty to do all sorts of transactions with maximum safety. If you lose your debit card, there is a constant fear of losing your money as you can’t claim the lost money. It will also lead to bouncing of cheques that were due and eventually low credit score.
If you lose your credit card, you can inform it to your bank, and you don’t have to pay for the unauthorised purchases. The credit card company will ensure to resolve the matter.
There Is Warranty Coverage
If you are making an expensive purchase, it is advisable to use your credit card instead of a debit card or other payment options. The reason behind this is extended warranty coverage. Most credit cards offer an extended warranty coverage of 1 to 2 years on the manufacturer’s warranty.
This assures you on the safety of the product and proves the credibility of using a credit card. You should check the terms and conditions before availing the extended guarantee, and the benefits vary with the issuers.
You Get Free Credit Scores
Credit scores reflect your payment habits, and using a Credit card also helps you to build your CIBIL score. Paying your EMIs on time and increasing your credit limit increases your credit score.
Nowadays, many credit card companies are also offering free credit scores which will eventually help you.
You Get Travel Benefits
Credit Cards come with numerous travel benefits to please the wanderlust in you. These include benefits on trip cancellation, baggage delay insurance, free airport lounge access, and travel statement credits among a list of other benefits.
Another travel benefit offered by credit cards is the auto rental collision damage waiver. This eliminates the fear of paying an extra amount for the rental company’s insurance.
Credit card benefits are not limited to travelling by air; you can also use it for availing benefits while booking through Uber or RedBus. For example, Axis Bank Neo Credit Card offers a 10% discount on RedBus bookings.
Advantage Of Price Protection
Many credit cards offer price protection. Suppose you purchased a dress at 15000 INR, but after 15 days, the price dropped down to 12500 INR. So under price protection, you get the difference between the price you paid and the reduced price.
This benefit ensures significant savings. However, it comes with specific terms and conditions like the price drop must be under 30 days.
It is Accepted Worldwide
If you love travelling, then you must have a credit card in your wallet. Credit cards are preferred and accepted worldwide. Hotels and rental services prefer customers who do the transactions through credit card.
Unlike a debit card, credit cards are more comfortable and convenient to use when you are travelling overseas. The additional protection against fraud or theft lets you travel with peace.
Most of the credit cards come with insurance benefits. And if you should count on this. Insurance benefits include travel insurance, medical emergency insurance, air accident, etc.
For example, HDFC Regalia Credit Card offers up to 15 lakhs of medical insurance protection.
While there are numerous benefits of using credit cards, you must not be careless around it. Keeping your cards safely should be your priority and you must be aware of how to pay your credit card bill. Similarly, you should ensure settling the debt and having a good credit score to enjoy the benefits.
If you still want to take precautions and safety measures, then you can go for a card protection plan. CPP is the insurance for your credit card and provides benefits like easy blocking, easy cancellation, emergency financial assistance and card replacement assistance, among other key features.