10 Advantages of using a Credit Card

With a big push being given to go digital (cashless), we outline 10 advantages of using a credit card.

Credit cards are a way of life now, but some people still prefer cash to manage their daily expenses and avoid applying for a credit card. The reasons are plenty, from concerns about security to fear of spending more. However, avoiding a credit card for these reasons means that you lose out on the many advantages a credit card has to offer. Let us look at 10 such advantages of using a credit card:

Building your CIBIL Credit Score Rating

Using your credit card responsibly means you get a boost in your CIBIL rating, this can help you secure a home loan, personal loan or a car loan in the future. All banks check your CIBIL score before approving your loan. Using a credit card responsibly provides data to the bank that can help you secure a loan with ease.

Rewards Programs (Points, cashback & Miles)

Most credit cards offer some kind of a rewards program that comes in the form of points, cash back or airline miles. If you use your credit card wisely, you can accumulate these rewards and exchange them for rewards with merchants, airlines or even pay off your credit card balances. If you are an avid shopper you can apply for a credit card that gives you points for every purchase made, if you are a love traveling and are a frequent flyer you could opt for a credit card that gives you miles with your favourite airline, if you love a bargain then you can opt for a cashback credit card.

Budgeting Expenses

Credit cards are also a great way to budget expenses and keep track of it. Spending on groceries or travel with cash means that it’s hard to keep track of how much you spend every month. Credit card statements give you a lot of data to analyse your spending patterns and clearly see how much you spend every month. Most credit card companies also offer supplementary cards that you can give your family members and see all their expenditures in one statement.

Shopping Online

Shopping online is another aspect that we cannot ignore these days. Credit cards offer great convenience while shopping online. While digital wallets like PayTm are useful, not all websites offer digital wallet payment options. A credit card is almost universally accepted and you can shop even on international websites. Credit cards also safer than a debit card to use in case you have security concerns, as most credit cards offer loss protection and fraud protection services. If your debit card was to be misused you lose your money instantly. With a credit card, you can dispute a charge with the bank and get it reversed if necessary.

Hotel Check-ins & Car Rental

If you like traveling then you will find a credit very critical as most hotels and car rental services require you to make a deposit before checking-in which is released after check-out.

Access to Funds in case of Emergency

An emergency can come unannounced and you can bank on your credit card to help you during these emergencies. Be it hospitalization or sudden travel plans, you can always depend on your credit card to take care of these expenses when the need arises.

Safer than Cash 

Credit cards are easy to carry and you don’t need to worry if you lose your credit card. You can call your bank and ask them to block your credit card instantly. Credit cards these days are also protected by a pin number and digital chip that ensures no one else can use your credit card. Some credit cards also offer to insert your picture on the card.

Use your Credit Card Internationally

Your credit card is valid internationally and it is safer than carrying dollars in cash or using an ATM to withdraw cash internationally. Some credit cards offer low transaction fees on international transactions

Consumer Protection

There is also the added advantage of consumer protection, in case a seller delivers a faulty product or fails to deliver, you can always call the bank and ask for a chargeback as the service was not delivered. Banks will investigate your query and provide you a refund if the seller is proven to be a cheat or indulges in fraudulent practices.

Discounts & Deals

It is not uncommon for sellers to offer discounts when using the credit card of a certain bank. These offers can usually come in the form a percentage of discount or a cashback. Recently the iPhone X was launched and Citibank offered Rs.10,000 as cashback for buying the phone on Amazon, Flipkart, and Airtel using their credit card.

While the advantages are many, you should also make sure you use your credit card responsibly and pay off your balances before the due date to avoid high-interest rates and charges. Use your credit card for expenses that you would have otherwise paid in cash and you can reap all these rewards without fear.