Monday, July 15

Benefits of Credit Card: Top 10 List

As digital modes of payment continue to gain prominence, cashless transactions have increased phenomenally. To facilitate such transactions, credit and debit cards have played a crucial role. Credit cards, in particular, have added convenience to life. Benefits of Credit Card not only mean easier payments, but numerous other benefits that allow users to enjoy several advantages. Besides, many banks offer free credit cards to customers and provide special credit card offers that can be used to avail discounts. 

Credit Card Usage Tips

From making EMI payments on credit card bills to availing credit in times of emergency, a credit card can be quite useful. Let’s take a look at the top 10 benefits of having a credit card. Do read: Things to Know before Getting a Credit Card

  1. Convenient Mode of Payment

Credit cards make life easier. Instead of carrying cash around, you can simply carry a plastic card that can be used for all types of transactions. Most shopping outlets and service providers accept cards and with a single swipe, all your transactions can be completed without worrying about change or counting every penny. Even online transactions can be seamlessly carried out with credit cards.  

  1. Earn Rewards

Credit card offers allow users to earn rewards on multiple transactions. While some provide instant discounts, others can be redeemed at the customer’s convenience. Banks collaborate with different merchant outlets to provide attractive offers on food, clothing, shopping, grocery and other daily needs. Reward points are also awarded for phone recharges and utility bill payments. Credit card reward points act as great incentives for the user. 

  1. Flexible Payment Terms

One of the biggest advantages of using a credit card is the flexible payment terms available to users. With a card you can buy things instantly and pay later. In many cases, people do not have enough cash to make a big purchase. But, a credit card allows the customer to fulfil his needs without worrying about immediate payments. The bill payment cycle can also be adjusted according to one’s convenience. If someone wants to make payments after receiving the salary, the billing cycle can be adjusted accordingly. 

All banks provide a grace period between the purchase and the payment date. During this period the customer does not incur any interest on the due amount. It generally ranges between 30 to 50 days, depending on the benefits associated with your card.  

  1. Timely Payment of Utility Bills

Credit cards are extremely useful for recurring payments. Users can set up auto-debit facilities to ensure timely payment of electricity, gas, telephone, mobile or TV recharge, rent etc. Failure to pay these bills can often accrue late fee charges. This can be completely avoided with credit cards. 

  1. Online Shopping

Banks often provide a free credit card that can be used to avail offers on online shopping. Although there is an upper limit for every credit card, bank offers allow users to enjoy discounts and convenient payment terms on their purchases. It also provides the freedom to conveniently order products from domestic or international websites where cash on delivery (COD) facilities are unavailable. 

  1. EMI Payments

In many cases, people are unable to pay lump sum amounts for their purchases. The options to avail monthly instalments on credit cards help users to conveniently pay back over 3, 6 or 12 months. EMI on credit card is particularly useful when you are thinking about buying a new mobile phone, a television, a household appliance or any other expensive item. The easy EMI terms provide the flexibility of paying back conveniently while enjoying the ability to fulfil requirements without worrying about the financial burden. 

  1. Special Offers and Perks

When you get a credit card, it comes with certain privileges and rewards. Every transaction made with the credit card is eligible for rewards. These points can be accumulated and redeemed for exciting gifts or vouchers. Other benefits like cashback and special online deals are also offered by some online and offline retailers. A credit card also allows the user to avail special deals on movies, amusement parks and different types of entertainment shows.

  1. Travel Benefits

If you are eligible for a Signature credit card loaded with special travel benefits, you can enjoy exclusive access to airport lounges free of cost. It also offers a number of other benefits related to carrying extra baggage, facilitating priority check-in at the airport and discounts on hotel bookings, car rentals and dining. For frequent travelers, it is recommended to check the travel benefits associated with the card before applying for it. 

Improving Credit Score

Some credit card issuers also offer special traveler credit cards that can be extremely useful for international tours and travels. From getting special discounts on airfare to availing priority bookings in renowned hotels and restaurants, the perks can be truly overwhelming. 

  1. Credit Score

People who regularly use a credit card can automatically improve their credit score. Although an extremely important benefit, a lot of users are unaware of this advantage. The credit score establishes the creditworthiness of an individual. Therefore, if the user utilizes the credit card responsibly and makes payments on or before due dates, it is likely to increase the credit score.

It opens up more opportunities for availing loans and credit from financial institutions. So, if you are looking to improve your credit score, it would be a great idea to frequently swipe your credit card and responsibly avail the benefits offered by the card. 

  1. Secure Payments and Fraud Protection

Credit cards are considered a safe mode of payment. It not only maintains complete privacy and security of all transactions, it also protects you against frauds. As a result, if your card has been misused or has been used for an unauthorized transaction, you must notify the card issuer immediately. The service provider will automatically block the card and you will not be held responsible for the fraudulent activity. 

Things to Consider

Although a credit card brings multiple benefits and makes transactions simpler, you need to be cautious about certain aspects. Users must remember that all payments made through the card are essentially loans that must be repaid on time. An inability to repay the due amount within a stipulated time will result in late fees. In fact, a high rate of interest will be charged on the amount and it will continuously inflate with every passing day.

If you incur interest on your credit card dues, an annual percentage rate (APR) will be calculated. The APR is calculated based on many factors ranging from a person’s payment history to his credit worthiness. If you have a better credit score in comparison to someone who has no credit history, the APR will be favorable for you. 

Therefore, it is essential to use your credit card responsibly. It is important to make plans for repayment well in advance. But, if you have no intention of paying off the balance within a reasonable timeframe, it will continue to accrue interest. Eventually, your spending power will be reduced and will potentially limit the advantage of using a credit card. So, avoid making impulsive purchases with the credit card. 

How to Use a Credit Card Effectively?

To make the most of your credit card, here are some important steps that you must follow.

Make Timely Payments: Always remember to make credit card payments on time. To avoid excessive charges and inflated interest rates on the accrued amount, make plans to clear dues on the stipulated date. 

Auto Debit Facilities: If you are unable to remember credit card repayment dates, it is a good idea to opt for the auto-debit facility. The automatic payment option will either pay off the entire amount or the minimum amount due for the month, depending upon your choice.

Aim for Full Payment: No matter what your financial liabilities are, consider paying off the entire amount every month. In fact paying a little extra is often beneficial. This helps to manage your finances better. 

Utilize Rewards Efficiently: To maximize benefits from your credit card, try to utilize the rewards efficiently. Keep track of the points accumulated from transactions and avail offers available from other merchants. If you have a paid credit card, you will be eligible for plenty of additional benefits. If you do not use them efficiently, there is no point in paying for this service.

Choose Cards According to Your Need: Card issuers have a wide range of credit cards. Depending on its type, the credit limit will vary. The perks and rewards for each card will also be different. Therefore, choose a card that meets your needs. For example, if you are a frequent traveler opt for cards that provide special benefits on tours and travels. Similarly, if you like to conduct online purchases, cashback schemes can be quite useful. 

Consult your credit card provider before making an application. Review the terms and conditions and make an informed choice. If you do not need additional services, it is also a good idea to opt for a free credit card. Always choose cards that match your needs and reward your transactions.

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