Advantages of Using a Credit Card

It cannot be denied that a credit card has become a necessity of sorts in our lives today, owing to a host of reasons. With its ease of use, convenient pay-back options, and various discounts, offers and deals that it gives us, it really is a payment method that is unequaled by other financial products in the market today. However, everybody knows that credit cards can also become debt traps if not used wisely. You can be in quite a soup if you haven’t used your head properly while spending, and lack money to repay your credit card debt when the bills come around.

However, there is quite a strong case for using a credit card. That nifty little plastic card in your wallet does come with many advantages, all of them worth exploring. A few of them are outlined below:

Advantages of Credit Cards:

  1. Offers Easy Access to Credit: This is easily the biggest advantage of owning a credit card. Since credit cards are a revolving form of borrowing, so theoretically, they can last a lifetime. It works on a deferred payment basis, where you use your card for your purchases/expenses now, and pay for them later. Another good thing is that your bank balance is not affected every time you swipe your card.
  2. A Line of Credit: Credit cards offer you the chance to build up a line of credit. This is more like a timeline of your financial transactions, and it is very important as it allows banks to view your active credit history, based on how frequently you use the card and made your repayments. Banks and other financial institutions also often look to an individual’s credit card usage history as a parameter to gauge his/her potential creditworthiness as a loan applicant. Therefore, your credit card is important even for any future loan or rental applications.
  3. Offers EMI facility: If you need to make a large purchase and feel that you either don’t have the funds for it, or don’t want to put all your savings for it, you can choose to put it on your credit card as a way to make the payment later (as I said, the deferred payments model). Also, you can also choose to pay off your purchase in equated monthly installments (EMIs) if you so wish. This ensures that you aren’t paying a lump sum for it all at once and damaging your bank balance. Paying through EMIs is cheaper than taking out a personal loan to pay for a purchase.
  4. Rewards: Yes, that’s right. Most credit cards come packed with a host of offers, discounts, and incentives all designed to push you to use your card (obviously). But then again, they aren’t bad. You can get both cashback as well as rewards points each time you use your card. Other lenders also offer discounts on purchases made through a credit card, such as on flight tickets, holidays or large purchases, ultimately helping you save.
  5. Flexible Credit: Credit cards also come with an interest-free grace period, which is a period of time during which your outstanding credit is not charged interest. This is the time between when you put a charge on your credit card and when that balance begins accruing interest. If you pay off your balance in full each month, you can avoid credit card interest altogether.
  6. Record of expenses: A credit card records each purchase you make using the card, which is then sent in a detailed list to you in your monthly credit card statement. This can be used to determine and track your spending and purchases, which could come in handy when you’re trying to draw up a budget, ascertain how badly (or well) you spend, see your debt, or even drawing out a plan for your taxes. You also receive an instant alert via SMS each time you swipe your card, telling you the amount of credit still available as well as the current outstanding on your card.

Apart from using a credit card, you can also head over to KreditBee if you’re in urgent need of short-term funds for meeting your expenses. It offers Personal Loans in the form of a Salary Advance starting from ₹1,000 up to ₹ 2 Lakh and offers all the advantages of a credit card discussed herein (and much more). Their loans are quick, hassle-free and are credited directly to your bank account – an apt solution to all those urgent cash needs that come up without a warning.

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