The credit card is one of the most misunderstood financial products of the digital economy, if you consult with any personal finance expert then there is a high chance that the expert will prevent you from using this rectangular-sized card despite its enormous benefits.
If you use this awesome financial tool intelligently then I’m very much confident that you are likely to get huge benefits. It helps you to finance huge shopping bills, providing emergency money along with credit card fraud detection also it offers other benefits such as building a credit score, getting cash backs, extra rewards benefits, and exclusive memberships, etc. It also makes you more responsible to handle your money effectively which is the most underrated feature of this product.
What are the benefits of credit card?
Building a credit score:
If you are 18 or older and don’t have any credit score then surely having a credit card is the best way to build up an excellent credit score. In the future, it will help you to access low-interest loans along with a big borrowing limit. So, if you are willing to build an excellent credit score, use your card regularly, and then pay the bill within the due date, it will easily help you to build up an excellent credit score. So, opt for a credit card according to your need and start using it.
If you have a low or zero credit score then you can apply for a credit card on fd, these cards are issued against fixed deposit for which you don’t need to provide any income proof or credit score. So, if you are willing to opt for the same then you can go for sbi credit card against fd or icici credit card against fd both offer excellent benefits to their customers. Also, you can visit Top 10 credit cards for the first time applicants in India to get more details for first-time credit card users.
Credit card safety features:
Are you worried about any losses due to fraudulent transactions while processing the online transactions? If yes, then instead of using your debit card or net banking, you must use the credit card as all credit cards come with a unique feature known as credit card fraud detection dataset which offers credit card insurance for fraud protection. It takes care all fraudulent transactions, to avail of the benefit you just have to let the issuer know by contacting their customer care within 24 hours about the event. I think there is no other financial instrument available that will give this much mental peace.
How to use credit card reward points:
Everyone loves to get some rewards for their work, what if the person gets rewards for spending using their cards, isn’t that cool? Using those reward points you can avail several benefits such as discounts, special gifts, etc. For instance, if you use an Axis Bank credit card, you can redeem your axis bank credit card reward points from the Axis Bank reward catalog, not only axis bank all almost all the popular credit card issuers are offerings more or less rewards benefits for spending through their cards like SBI credit card reward points program, Citi rewards credit card program, RBL credit card rewards, ICICI credit card reward points program, etc. By using these points one can buy new stuff as well as can be converted into cash too. Such schemes are RBL credit card reward points convert to cash, SBI credit card reward points convert to cash programs, etc. To know more about the top 10 reward credit cards visit Top 10 Reward Credit Cards In India 2021.
How to get cashback on a credit card:
Money saved is money earned, so why don’t you use a credit card to save your hard-earned money. Now many Co.’s has launched co-branded credit card which offers cashback up to 5% on the shopping. For this, you can go with the HSBC credit card as the HSBC cashback credit card is one of the best cashback programs in the industry.
Like other benefits, access to exclusive services as well as places is a very tempting benefit of having a credit card, by using a lounge access credit card you can get exclusive access to airport lounges across the globe free of cost or at a very minimum cost. They can also enjoy free movie tickets, dinner discounts, and specially crafted membership benefits for their family and friends at zero or at a very low cost. Not only that most of the premium credit cards offer golf access free of cost, along with priority passes to various places.
How credit card can be a regular source of interest-free money:
There is a quote that says nothing is free in this world, but it’s not entirely true as in the credit card one can get free money for a 30 – 50 days period depending on the card. So, rather than using your hard-earned cash or debit card in shopping, let your money grow in other financial products and enjoy the benefit of free money.
Credit card companies also offer loan against credit card it is a pre-approved loan scheme, and it is best for short-term cash requirements. You can also withdraw cash from your credit card. Although it is very expensive and involves credit card cash withdrawal charges.
Ease of use And acceptance:
The usage of the credit card is the easiest thing in comparison with any other payment method, even easier than the cash, as handling the cash is a bit tedious and counting takes a hell of a lot of time while paying for the big transaction. On the other hand, using a credit card is too simple. It is accepted across the globe as you just have to swipe it and it’s done, but in the case of cash, there are too many restrictions as every country has its own currency which costs a lot while exchanging at the money exchange counter at the airport. So, if you are on holiday or attending your business meetings just use the credit card and enjoy your holiday or pay full attention to your work to get more ROI.
A majority of credit cards come with the new contactless payment facility, this facility allows you to make contactless credit card payments with just a wave at any secure reader machine.
How can you track your credit card spending:
Want to limit your spending? Then choose the credit card as your only payment method as at the end of every cycle you will get to know where, when and how much money you spend. Also, you can pre-set your spending limit which will help you to avoid your frugal spending habit.
Now I think you already got the answer to your question, so why are you waiting for? Just check out our top 10 cards on each segment to help you to choose your most desired card.
Now if you are thinking do I need a credit card? Then I would say the answer is up to you. You can of course live your financial life without having a credit card. But if you have one or two of these rectangular cards in your wallet, you can easily build up a good credit score, finance your big purchases, and protect yourself from fraud.
Credit cards are one of the easiest ways to build up credit scores. But if you don’t have a credit card, you can still create a good credit score by using the following tips –
Things to be careful while using a credit card:
Credit cards are one of those financial products that can earn you benefits from your expenses. But if it gets in the wrong hands or if it is not used properly then this thin rectangular plastic card has the potential to break your financial backbone. So a credit card always needs to be used properly. There are certain things you need to be careful about credit cards they are listed below
- Interest rate: The interest rate of credit cards is the highest (around 3.5% monthly) among all the personal financial products available in the market. But you don’t need to worry about it if you make the payments timely, then there will be a 0% credit card interest rate calculated on the loan.
- Payment dates: Credit card users need to return the used credit to the card provider within a certain date which is called the payment due date. This date is very important because if you miss that date the interest rate will start counting on the balance amount and on the fresh payments you make with your card.
- What is minimum amount due in credit card: Credit card companies offer their customers to make minimum payments towards their dues to avoid late payment penalties. Also, the transaction will not be flagged as default if you pay the minimum due payment. But the rest of the amount will still attract interest and you will get no interest-free period. So always clear off your credit card dues within the due date. And if there is an emergency, then at least pay the minimum due amount and stop using the card until you clear off your dues.
- Utilization ratio: Utilization ratio or credit utilization ratio is the ratio between your total available credit limit and your used credit amount in a credit cycle. A lower credit utilization ratio makes you a much trustworthy customer where a higher credit utilization ratio makes you a credit-hungry customer and less trustworthy. So try to keep your credit utilization ratio within 20% to 30% of your total credit limit. So every credit card user should their check credit card balance regularly.
- Applying for multiple credit cards: When you apply for a credit card the credit card company initiates a hard inquiry and it will reflect on your credit report. Such an inquiry can reduce your credit score by some points if the application gets rejected. If you apply for multiple cards in a small period of time, the small losses of your credit score will add up and cost you much bigger damage.
How to use a credit card properly?
If you want to earn benefits from your credit card, then it needs to be used properly and in a smart way. There are some tips given below that can help you to understand how to use credit card properly? and earn benefits too.
- Apply for the card that suits your needs: The first and the most important thing is to choose a proper credit card for yourself. Now the question is – which card is best for me? There are various types of credit card available in the market and choosing the most suitable for yourself can be challenging. But you can make it easier for yourself. First, analyze your spending pattern. For instance, if you spend a lot on fuel purchases then you should look for the best credit card for fuel or if you want to earn cashback then you should go for a cash back credit card. Then compare the card according to their credit card charges and offered benefits. In this way, you can choose the best credit card for yourself. You can also visit our top 10 credit cards list, it will make this process much easier.
- Pay your bills on time: If you pay your credit card bills timely your credit history will improve. And it can also help to increase credit card limit. You can also get some exclusive offers from your card provider.
- Make smart repayments: Credit card companies offer their users some smart repayment options like credit card EMI. It allows you to split your high-value purchases into monthly installments and reduces a lot of financial strain from you. Although, you will have to bear a low credit card EMI interest rate you can find it beneficial for high-value purchases.
- Time your big purchases: If you need to make a big purchase with your credit card, try to make it just after your bill generation date. In this way, you will have a much longer interest-free period.
- Follow the offers: Credit card companies offer special benefits on some selected purchases. You should try to focus on those spends which can earn you benefits. Reward points can also be beneficial in long run. You can exchange them for flight tickets, movie tickets, or some gift vouchers. If you want to earn reward points then you should check our top 10 reward point credit cards.
- Deal with trusted merchants: You should always try to use your card at the trusted merchants (both offline and online). It will minimize the risk of fraud and misuse of cards.
- Keep track of your spending: Every credit card holder should track their credit card uses regularly. It will not only help you to maintain a monthly budget but also ensure that if some fraud transaction happens it will come to your notice early.
In this way, you can earn the maximum benefits from your credit card. There are lots of risks involved with credit cards, but you can easily minimize them just by using your card properly and maintaining discipline.
And if you are too much worried about overspend, then get a credit card against fd. These are the credit cards that are issued against a fixed deposit account, and the credit card limit will be the same as the deposited amount.