Credit cards have captured the imagination of young working population in India. Gone are the days when you first save and then spend. In today’s fast-paced life, you don’t want to wait. Credit Cards are an excellent tool to instantly satisfy your need to possess any goods or service.
The concept of credit card is very simple. Banks evaluates your income profile and gives you pre-approved loans. Whenever you spend on your credit card, you are basically availing of these loans form the bank. The bank gives you some time, around 15-20 days to pay back the amount, after which they start charging interest.
Usage of credit card thus is useful only if you are certain of your ability to pay the bank the entire amount spent within the stipulated 15-20 days’ time. Assuming, you are very disciplined in paying off your credit card bills, and never incur interest on the outstanding amount, there are a host of advantages that you can take from your credit card.
1) Earn more interest on your savings account:
All of us have some regular monthly expenses like phone bills, electricity bills, grocery, medical bills, eating out, movies etc. Assume you spend approx. 10-12 thousand Rupees every month on these expenses. Now if you pay them through your credit card instead of directly paying though cash, then the cash stays in your account for longer days and hence earn you more interest. This is useful only if you clear your entire credit card bill on time and do not incur late payment charges on them.
2) Easy EMI:
Most retailers provide products on easy EMI. Most of them prefer credit cards for the same as it does not involve any physical documentation. Some of them in fact offer EMI at zero percent interest. Thus clearly having a credit card is these occasions is very useful.
3) Emergency Cash:
Most banks also allow you to withdraw cash with your credit card. Imagine a scenario where at the end of the month you are not having much cash in your account and some emergency comes up. Your credit card will come as a big help in those times. Please note most banks do not give you any credit window to pay-off the cash and normally interest is charged from day 1 itself.
4) Discounts & Offers:
Some retailers offer additional discounts on using any particular bank’s credit card. Also there are various offers available on a variety of goods and services on using any particular bank’s credit card. Normally these banks have a business tie-up with the vendors and the customer gains from it
5) Improved CIBIL Score:
Having a credit card is similar to taking a short term loan, hence your CIBIL record will get generated. If you are able to avoid late payments, it would reflect favourably in your record which will be a great advantage when you go for other loans like home loan, personal loan etc.
Hope this article has been useful to you.