Although credit cards offer a list of unmatched benefits, they frequently receive mixed, if not entirely negative, ratings from individuals of all ages. Even the youngsters, known as millennials and Gen Z, are prone to believing prejudiced beliefs or gossip about credit cards and debt scams, and hence avoid using credit cards.
Not only that, but even current credit card customers frequently struggle to maximize the perks of their cards by just being oblivious of or reluctant to fully utilize the accessible amenities and functions.
Credit cards can be a godsend if you follow a strict payback schedule and make the most of the offered incentives. Research says, over 62 million credit cards were in operation in the fiscal year 2021.
So, here are five amazing benefits of carrying a credit card!
1. Interest-free period
Numerous credit cardholders are either ignorant of or too apathetic to take advantage of the interest-free duration that their credit card provides. This phase relates to the period between both the date of a credit card purchase and the scheduled date of repayment, within which no interest is imposed on your credit card purchases.
This offer stands as long as you settle the entire balance within the exact timeframe. The length of time varies by lender and is also dependent on the expiry of your credit card purchases, but it typically ranges from 18 to 55 days.
The sooner you execute large purchases in your payment period, the more leeway you have in the guise of an interest-free duration to return your debts on or by the deadline. So, apply for a credit card at the earliest and make sure to enjoy this interest-free period!
2. Strong Credit score
When we use credit cards to make purchases, it is the company that pays on your behalf and then you need to reimburse the money on or by the given deadline as specified by the card’s payment period.
Credit cards are considered like debt because of this fundamental concept, and payments are evaluated by credit organizations as if they were loans. As a result, your credit score includes information on the loan EMIs as well as your credit card transaction records.
So, in order to have a credit score on which credit agencies can compute your credit score, you must take out some type of credit. Now that we all know loans have an added interest, credit cards are a smarter and more cost-effective option to improve your credit score.
3. EMI Conversion
Credit card customers can now convert their EMIs in two ways. One, you can transform an existing credit card payment into EMIs. Two, by completing the purchase within the EMI.
In the former scenario, there is typically a transactional cut-off limitation of Rs. 2,000, Rs. 5000, or more (which varies by lender and card) purchases that are qualified to be transformed into monthly installments.
Although this service allows you to avoid settling the lump sum payment by the following bill due date, it comes at a price in terms of interest and, in some cases, service charges or other additional costs imposed by the credit card provider.
4. Pre-approved Loans
The availability of pre-approved loans on credit cards is comparatively recent and has only a few benefits until now.
Credit card loans are a potential substitute for personal loans because they have the same features as personal loans, such as no restrictions on how the funds can be used and payback terms of approximately 5 years.
Credit card loans have a big advantage such as they frequently involve in-moment credits, making them a convenient borrowing alternative for credit cardholders who need money.
This pre-approved loan is exclusively available to a restricted group of present credit cardholders depending on their expenditure habits, credit record, and bill repayment capacity.
5. Redemption benefits
Numerous credit cards give loyalty credits based on the type and number of purchases you make with your cards.
As your loyalty points build, you’ll be able to reclaim these for a variety of advantages, including gift cards, converting into airline credits for flights, redeeming at specified retail locations or in e-commerce websites and so on.
Over to you…
These were a few of the many reasons why credit cards are advantageous and can help an individual manage his finances well. So, get yourself a credit card now!