Credit cards become a valuable financial tool once you learn to use them sensibly and responsibly. It offers rewards, protection, convenience and helps build an effective credit rating. So, what kind of benefits can one reap by using a credit card? To get started, let’s look at some of the top benefits of using a credit card:
Credit grace period (spend now, pay later): Arguably, the most attractive feature of a credit card is the interest-free grace period that users can enjoy provided the amount to be repaid is cleared on the due date. IndusInd Bank grants up to 50 days of credit to its customers without having to pay interest.
Credit score: Since credit card transactions are similar to available loans, all such transactions are reported to the credit bureaus who use them to calculate, as well as build your credit profile. Credit scores become crucial if you are considering availing loans for business expansion, vehicle purchase, personal needs, or simply buying a new home. A good credit rating allows borrowers to negotiate the best deal with the lending institution, helping them achieve their financial goals.
Rewards and Benefits: These include benefits such as discounts, cash back, reward points, loyalty credits, free club memberships, free access to airport lounges, among others. You should select the card that offers the most and fits your lifestyle requirements.
Cash planning: You can time your major purchases in a way that can help you get a longer credit period. Making credit card purchases in the early days of the billing cycle can maximize the grace period. Some card companies provide a graphical view of your spending habits which are broken down into basic spending categories by time period. This can help you analyze your expenses and make necessary adjustments to your cash flow plan.
Credit card EMI: Banks and financial institutions offer cardholders the option of paying for certain purchases by equivalent monthly installments (EMI). In fact, several card issuers even go the extra mile to offer interest-free EMIs with terms ranging from 3 to 36 months. This is a useful option for those who don’t want to pay for large purchases all at once. Instead, they are comfortable spreading repayments over a few months.
Instant pre-approved loan: Credit card issuers offer pre-approved loans to card users with a healthy repayment record and credit profile. Some credit card issuers offer loan amounts (with terms ranging from 6 to 36 months) that exceed the approved credit limit. This is convenient in case of financial requirements.
Never miss a story! Stay connected and informed with Mint. Download our app now!!