5 Reasons to Start Using a Credit Card Now
#1: It gives you easy and quick access to credit
The best thing about credit cards is that they allow you to get quick access to funds, freeing you from any worries of financial emergencies. There may be unpredictable situations where you are forced to make immediate payments, such as payment of medical bills. Or it could be that one large expense puts pressure on your other payments that go out every month, like your utility bills, rent, or even premium charges against your policies. Credit cards are useful tools in every situation and help you get all this done in a hassle-free manner.
Especially for the young learners who are just starting out with their career, a credit card might come out as a savior. No more tensions about being on the brink of bankruptcy at the end of the month! Credit cards allow you to get funds and ensure that your monthly budget is not disturbed.
For example, a clash between a delay in your next month's salary and your monthly rent payment could land you in a tight spot. Paying with your credit card can help you buy time and manage your finances better.
However, a paramount thing that you must keep in mind is that credit cards do not give you free money. It must be repaid on time so that you can avoid falling into a debt trap.
That being said, the credit card advantages include a no-interest credit period. This implies that no interest is charged on the amount you spend on your credit card within a given period. This time horizon is typically between the dates when you make the credit transaction and when the credit card bill is due. However, interest is charged on any late repayment and can take a toll on your finances. So, with credit cards, you can spend without any worries, but you must do this mindfully.
#2: It helps you build your credit score
A credit score is the rating given to you on the basis of your creditworthiness - your profile is assessed and based on your credit history and ability to repay loans, a three-digit score is given to you. The most widely accepted credit score in India is given by CIBIL, which is why it is sometimes also known as the CIBIL score. A credit score is generally assigned within a range of 300-900, and the higher the score is, the better it is.
Having a healthy credit score comes in handy when you wish to avail a loan. It indicates how creditworthy you are and defines your ability to repay the loan without defaulting.
Credit cards are helpful in creating a credit history. Each time you use your credit card, it contributes to your credit report. Timely payments of your monthly credit card bills can help you create an excellent image (in terms of your finances), positively affecting your credit score. Other things that you must keep in mind are staying well within your credit limit and not maxing out your cards.
#3: It comes with multiple benefits, cash back, and reward points
One of the most exciting features of a credit card is that it comes with a range of benefits. These include earning a cashback on timely payments or getting reward points on each or some transactions. There is a specific number of reward points you can earn depending on the amount you have spent. The higher the transaction amount, the higher will be the number of reward points accrued in your account. You can redeem these reward points in exchange for vouchers and gift cards of different brands, use the points to make purchases, and even use them to repay your credit card bill. These reward points usually come with a validity period, so make sure you redeem the benefits before it is too late!
Apart from this, you may get other benefits such as discounts on movie tickets, ride-hailing apps, online shopping, bill payments, and even get lounge access at airports while traveling (who can say no to such deals?). It can also fetch you better travel plans and coupons for booking hotels and entertainment activities!
#4: You can use it anywhere
The convenience of payment is a top priority among the credit card advantages customers search for. The one factor that makes credit cards so lucrative is their universal applicability. As our nation progresses and its financial infrastructure gets boosted, the use of credit cards has become quite mainstream; so much so, that you will find an option to pay via a credit card almost everywhere. Be it an e-commerce platform where you decide to use your credit card after shopping online or your local Kirana shop – almost everyone accepts credit card payments.
In the larger picture, credit cards can be used for payments anywhere in the world. If you wish to make payments in another currency, there are special provisions for it. You may also carry your credit card while traveling anywhere and make payments through it (if it is an international credit card).
This will also help you reduce your dependence on cash. At any point in time, you can only keep a limited amount of cash with you. This restricts the transactions you can make via cash. Moreover, keeping a lot of cash with you can also be unsafe. The hassle of carrying the currency notes goes away when replaced by a single card. Additionally, with less idle cash in your pocket and more funds in your account, you can also ensure that you earn some return on it!
#5: It allows you to become financially responsible
Managing your credit cards can inculcate a sense of financial responsibility. Having the option of making quick payments on credit with just a swipe can be tempting (yes, we all see the latest iPhone with starry eyes), but it is also essential to prioritize expenses and be conscious of restricting your spending to as much as you can repay.
Credit cards allow you to make a budget and plan your recurring expenses accordingly. Moreover, you get monthly statements that mention all your transactions, allowing you to review your expenses and rectify any tendency for mindless spending. These statements also help you build a paper trail that can come in handy when applying for loans.
Apart from this, credit cards come with an interest-free grace period. You can make use of this and manage your purchases and expenses accordingly. A great trick is to try to schedule your expenses at the beginning of the month. In case the amount of repayment becomes heavy on your pockets, you can delay your purchases from the end of one month to the beginning of the next. This shifts the burden of payment to the next billing cycle. Thus, one of the credit card advantages is that they teach you how to manage your finances smartly.
Credit cards also promote better risk management, allow you to have control over irrational urges to spend, and build a strong foundation for a healthy credit score.
The takeaway
Credit cards are excellent tools that can help you set a solid financial foundation. However, you must keep in mind that it is not free money. It is vital to make timely payments on your credit card bills to avoid falling into a debt trap. But apart from that, credit cards can fetch you great deals, provide you with a lot of flexibility, and make your life easier. It is thus a great move to incorporate these credit card advantages into your life.
