Ever since the introduction of credit cards in India in early 1980s, there is wide spread acceptance of the mode of payments through credit cards.
Credit cards can be a real boon to the user of the card if he or she uses it wisely, at the same time it can also be a bane to the user of the card if he or she uses the card erratically, emotionally or mindlessly. When you are using the credit card for payment for your purchases of any commodity or any services, you are essentially creating a debt on you, you owe the amount which you use it, to the issuing bank (bank that has issued a card to you). Let us see what are the benefits or using the card.
BENEFITS OF USING THE CREDIT CARD:
- Credit Period For Payment: You get a credit period of 40 to 45 days depending upon the card and its issuing bank. There is a usage cycle of 30 days usually, suppose the card’s cycle starts on 11th of the month and ends on 10th of the following month, the issuing bank of the credit card will raise a bill on11th or 12th of the month for the usage of the card (for the payments you have done for your purchases) and will give you 10 to 15 days for making the payment. When you are using the card in the starting of the cycle you are getting the maximum credit payment facility and using the card in the mid of the usage cycle or near the end of the cycle, will give you lesser days for card payment. That is say, by using the credit card wisely you are getting interest free credit facility, hence plan your purchases wisely and make regular payments fully.
- Cash Backs, Incentives Etc.: Whenever you swipe your card and make certain purchases you earn cash back or reward points. These reward points can be later on encashed. Cash backs are a certain percentage of amount gets credit back to your credit card account (example fuel incentive).
- EMI Facility: You can plan and buy a big ticket product which costs more and opt for EMI facility and not let your Savings Bank Balance dive down or encash your Fixed Deposits or Mutual Funds or any other investments and allow them to grow as per your financial plan by not touching them or you need not take a personal loan because as and when you buy a big value product you can opt for EMI by visiting the app of that particular bank and hit the EMI button against that amount for a particular duration or inform them via Email or phone messages.
- Discount Offers: Almost all credit cards have a tie up or collaboration with big reputed companies and they offer lucrative discounts. This is called co-branding of that particular credit card. For example ICICI Bank Credit card has a tie up with Amazon and they offer instant 5% cash discount whenever you use ICICI Bank credit card. Similarly RBL Bank has a tie up with Bajaj Finance, Axis Bank has a tie up with Vistara Air Lines there are several other credit cards who have a suitable tie up for the benefit of the card holders.
Whenever you are using the credit card one thing to be borne in the mind is the thought of making your payments as and when due, you must pay them fully or else pay the maximum amount and pay the balance amount immediately in next cycle and do not wait for the due date of the next cycle so that your credit value stands to the maximum. If you are very careful and alert when using the credit card it will give you maximum benefits and will help you in maintaining the credit score. And if the credit score is healthy the bank may consider enhancing your credit limit on your credit card. Strong credit score happens when your payments are prompt, responsible spendings etc.
Hello! I am Ramesh P. Raheja, I am the founder of strongwealth.in. For last more than 40 year I have been in profession of free lance accounting. I want to share my experiences and sincerely help people achieve their goals faster in their lives. The views present in this blog are only for reference and guidance purpose. The reader should always take professional advice from their consultants/tax advisor/financial planner/insurance etc. as the case may be.
