7 Reason Why You Must Use Credit Cards For Financial Wellbeing


With the boost to #DigitalIndia initiative now more Indians are having Credit Cards or plastic money in their pockets. Earlier we've seen how you can save your hard earned money with credit cards with no annual fees or low annual fees in India. Now we'll see how you can effectively use the credit cards as a good personal finance tool. 
Credit cards have changed the way the financial transactions are conducted. The current article is to throw a limelight 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 spendthrifts, in fact, they are owned by the people that manage their finances effectively.

Most of the Indians 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, not only this here are top 7 reasons that contribute to the effective financial management with credit cards and how you can take benefit from them 

#1 Convenience

This is the greatest advantage offered by 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 are more convenient as 
  1. They extend your spending capacity
  2. There is no need to maintain balance in your account to shop for the products you need.
  3. 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, although this comes with responsible spending your limit.

#2 Credit Score

All loan aspirants are aware of the organization called CIBIL, which is the authority which analyses the creditworthiness of the applicant and provides a credit value ranging from 0 to 900. As the cost of living in the developing countries like India 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. There are various factors which affect your credit score, one length of the credit card account is one of the factors that come in to picture when deciding your credit score. 

#3 Rewards And Cash Back Programs

Get Rewarded to use your credit card for daily spendings ! Yes, 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.

#4 Borrow For Free!

When you are using the credit card you are entitled to the grace period which ranges from 20 to 55 days on your date of purchase. This is one of the important benefits that you cannot ignore while picking the credit cards. As you will get interest free credit for the amount spent within the credit limit throughout the billing cycle, choosing a right credit card involves the checking 'Number of Days Interest Free Credit' offered by the bank. 
Another reason can be you can convert your purchases into equal monthly instalments or EMI very easily, this provides the ability to fulfil your dreams early. 

#5 Safety & Purchase Protection 

When you compare transaction conducted by credit cards to that of any other financial instrument they appear to be more secure and safer, the reason behind this is that they offer 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. Also 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, the 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 from fraudulent transactions.

#6 Debt Consolidation

Though we make credit card purchases with 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.

#7 Universal Acceptance

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.

Over to You 

Hope now you have clear idea on the benefits of the credit card, and how they are beneficial to manage your personal finances if used effectively. Please let us know your views on this! 

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