Credit cards have changed the way the financial transactions are conducted. Until recent times owing a credit card was not a favoured option due to the myth about impulse purchase and security issues of the credit card usage but, the effects of demonetization projected a bigger picture about credit cards and why they are must for the financial well being of the person. The current article is to throw a lime light important benefits of the credit card that contributes to your financial well being.
Many people go by the misconception that the credit cards are owned by spend thrifts, in fact, they are owned by the people that manage their finances effectively.
This is the greatest advantage offered by the plastic money. You will have a great convenience while shopping big because these cards remove the hassle of carrying bulky currency and securing them throughout your shopping journey. They extend your spending capacity. There is no need to maintain balance in your account to shop for the products you need. The credit cards issued by different banks offer you credit limit free of interest throughout the credit period so, your desired products can be bagged without worries of maintaining balance in the account. However, you should ensure that you spend money responsibly.
The cost of living in the developing countries is not on par with their income levels so, most of the people approach a bank for loan assistance to make big purchases like houses, conducting business or different types of loans. Banks look at your credit score to offer any type of loan you seek. using the credit card responsibly will help you establish a good credit score which plays a key role in the low-cost loan approval. Credit card usage is reported to bureaus to monitor credit card management. The credit card used for a longer period in an effective way helps you build a good credit score.
Rewards and cash back programs
To motivate people using credit cards, many banks today offer signup bonus on credit cards they offer. You tend to get free points on spending the stated amount in the stipulated time. This can be in the form of reward points or reversal of credit card fee. These credit card also bring many reward programs to its users. You should find one based on spending habits. Few cards entitle you to the reward programs for grocery shopping and few for spending at their partner outlets. Make sure to check these terms before you pick the cards. The reward program offered by the credit cards can be in the form of redemption points, cash rewards or travel perks even free movie tickets.
Borrow for free
The grace period is one of the important benefits that you cannot ignore while picking the credit cards. The banks do offer the credit cards with a certain limit based on income levels of the person. You will get interest free credit for the amount spent within the credit limit throughout the billing cycle. The amount spent will remain in the checking account until the payment is made. The grace period you get through credit card purchase will help you avail the discounts instantly and your amount will stay in the bank account for a longer period earning interest.
Protection against purchase
The transaction conducted through credit cards offer a great purchase protection. Your credit card will stand in the line when you want to fight against a charge or a defective product. The credit card purchase will assist you with instant cash back in any such scenarios.
Transactions using the credit card are safer when compared to a debit card. Though banks offer the transactions conducted through both debit and credit cards, in the instances of a fraudulent transaction, you will be losing the money from your account instantly and it takes time for the banks to refund the same. Any checks issued during the meantime will find no balance in the account, thus impacts your credit score. On the contrary, fraudulent transaction through credit card will not take any money from your account, the attempt can be stopped immediately by blocking the card. The banks even offer insurance plans to protect you against fraudulent transactions.
The emergency line of credit
When you have a credit card handy, it will keep you away from the hassle of maintaining money in your account all the while. Whether it is hospitalization or any other emergency monetary assistance, credit cards come in handy when unexpected costs arise in the life.
Make instant purchases
When you want to buy expensive products and do n’t have money in the account, credit cards play an effective role in speeding up the transaction. If the price of the product is within your credit limits, you can instantly make the purchase. If you have 0% purchase credit card, the cost of the item can be spread to a number of months and clear the payments easily.
Though we make credit card purchases with the good intentions, there are times when you will not be able to pay the credit card bills on time. The balance transfer option in the credit card works great at this juncture. You can move the debt from one credit card to other to get that extra grace period that allows you to arrange money. This balance transfer could be an option if you want to move the debt from high-interest credit card to low-interest card. This act will save you a good deal of money as well.
Track your spending
Most of the people stay away from the credit cards due to built-in myths of impulsive purchase, but using the credit card for your purchases will help you have an eye on your spending by keeping a track of it. You can easily track the information about when, where for what the credit card is used for. The spending records are maintained by banks for years. This crucial information will be quite helpful to you while filing tax assessment.
If you are a travel freak, a credit card is a must have financial tool for you. The card can be effectively used for addressing a wide number of needs in different countries like renting a car, book a hotel room and much more. These cards have wider acceptance compared to debit cards. Low exchange rate credit cards will help you manage your expenses effectively on a foreign trip.