Financial experts keep telling that the credit card could land you in trouble and it will hurt your Credit Score. It is true that reckless use of credit card can lead to debt trap and bring down your CIBIL score immensely, but there are benefits of using credit cards as well. The benefits being:
- Accepted universally:
It is easier to use a credit card when you are travelling as it is universally accepted when compared to debit card or cash. If you are in a foreign country and want to book a hotel room or rent a car, credit card will come to your aid. Debit card might be safe for you to use in your domestic country for domestic use, but to use it in a foreign country it is definitely not so safe.
- Enjoy grace periods to make payments:
The benefit of making a purchase using credit card is that you do not have to pay instant cash. The practice that you must follow is to make the payments well within the time frame given to you so that you can hold on to the cash in your savings account and also access credit at your convenience for no extra cost. Apart from the billing cycle, you are also given a grace period to pay the outstanding balance without having to pay any extra fee. The time frame is usually 15- 20 days depending on the credit card issuer. If you judiciously use the billing cycle and the grace period, your CIBIL score will not be harmed.
- Save on air travel:
Debit cards do not offer as many benefits as they are an extension of your savings account. However, credit cards on the other hand does offer you benefits if you have a CIBIL score of 750 or above. If you are a frequent flyer, then you can opt for a co-branded credit card with a particular airlines that you regularly fly with. This will give you a sign up bonus of a good number of travel miles and will save you a lot of money on air travel. If you have chosen the right cards, you might get one or two free flights in a month depending on the sign up bonus and other points that you have accumulated in your travels. Some cards offer you points that can be redeemed for gift cards or freebies.
- Cash back schemes:
Most of the e-commerce websites have major tie-ups with the major banks and offer anywhere between 1-5 percent cash back on most of the purchases. This will help you save quite a lot when you are shopping online.
- Earn reward points:
Reward points are the best way to make the best way to avail more benefits from your credit card. If there is no use of those reward points, then stock them up and you can use them to avail hefty discounts on flight tickets or hotel bookings when you wish to go on a vacation.
- You won’t have shortage of personal funds:
Online frauds are not uncommon and when you use your debit card to make payments online, there is a potential for fraud. Credit cards are safer than compared to your debit cards. By the time you realise that your debit card is being used fraudulently, you would’ve lost a lot of money by that time and you will fall short of personal fund. Credit card transactions will send you a notification at all times and you can immediately inform your issuer to stop the transaction.
Though there are benefits of using credit cards, reckless usage will land you in a lot of trouble and you will have a poor CIBIL score that may not give you access to credit in the future. So, use your credit card wisely and enjoy all the benefits that it has to offer.