Credit cards are a type of unsecured credit offered by various financial institutions in India. It offers a revolving line of credit to the cardholder. The user can draw a short-term loan from an available credit limit and utilise that amount to purchase essential goods and services.
These financial tools have become immensely popular in the last decade thanks to their convenience, benefits, and features. Today, there are more than 40 million active credit cards in India; transacting more than Rs. 144 million between 2017 and 2018.
There are several advantages of credit card. Let’s take a look at some of the top features you should aim to make the best of.
• Save money on shopping – Financial institutions often tie-up with several retailers and service providers to offer lucrative discounts to the cardholders. It is one of the biggest advantages of a credit card that frequent shoppers enjoy. One can save a significant amount of money on their every day and costly purchases.
• Helps maintain budget – Credit cards can also help the user stick to his or her budget. Someone who uses their credit cards for all their purchases can easily keep track of the expenses as they are reflected on the credit card statement at the end of each month. Carefully going through the statement will allow the cardholder to understand what caused them to exceed their budget as well as any discrepancies or fraudulent transactions.
• Improve credit score – Credit cards are a great tool to improve one’s credit score and financial portfolio. Credit bureaus judge an individual’s creditworthiness by evaluating their financial history. A cardholder will be deemed financially responsible if he or she maintains a history of timely repayments and stays within the recommended credit utilisation ratio. Over time, it will improve the credit score and allow the cardholder to avail future credits with ease.
Utilising the finances responsibly and garnering a high credit score will also improve the possibility of an automatic increase of credit card limit. Lenders will consider that the user has a higher repayment capability as well as minimum chances of defaulting. It will allow them to increase their line of credit with that particular cardholder.
• Ensures safer transactions – Credit card companies implement various security measures to ensure that the user stays safe from frauds or fake transactions. A financial institution can cancel and revert any unauthorised transaction if the cardholder reports it within 24 to 48 hours. Feature-rich credit cards like the Bajaj Finserv RBL Bank SuperCard also offer additional security measures to ensure zero fraudulent activity on their customer’s account.
• Provision for emergency advance – Several financial institutions offer emergency loans to their customers. This is one of the key advantages of a credit card as it provides financial backing during an unforeseen event. Companies generally charge interest and a processing fee on the amount of money availed as an emergency loan.
Certain financial institutions like Bajaj Finserv even offer an interest-free period on such advances. One can convert their card’s limit into a loan and enjoy an interest-free period of up to 90 days. This feature helps make repayments easier to complete.
Bajaj Finserv also provides pre-approved offers on credit cards, personal loans, home loans, business loans, and several other financial products. Such offers simplify the process of availing finance and help you save on time. You only have to provide some essential details online to check your pre-approved offer.
• Various loyalty programs – Almost every major financial institution runs various loyalty programs for their credit card customers. These include reward programs, welcome and milestone bonuses, and complementary services that a cardholder can avail.
These additional services are some key advantages of credit card usage. A customer can benefit from the reward points by redeeming them for gifts, offers, cashbacks, etc. These points are disbursed whenever a cardholder spends a certain sum of money on an online or regular purchase.
Similarly, welcome gifts offer a large number of reward points whenever a new customer signs up for the card. Milestone gifts reward a customer when he or she reaches a certain spending milestone. Customers can also avail courtesy services like complimentary airport lounge access for a certain number of times every year.
These numerous advantages of a credit card along with their financial backing make them an invaluable tool in the modern economy. Timely repayments and careful management of credit can help a cardholder utilise this financial tool to its fullest extent.