20 Benefits of a Credit Card

Credit cards are like a necessity these days. A lot of people wonder whether they should be using it or not. Many people consider credit cards as a menace because it leads to overspending and it works in the opposite direction of the saving model.

But, we urge these people to reconsider their mind, as they might not be aware of some of the amazing advantages that credit card can offer.

A credit card can actually save money for you, get you insured and even provide security. Apart from this, you can get some free perks too. Let’s see, how credit cards can be highly beneficial for the user.

Savings

Rewards and Savings

Consumers can save a great deal of money through Credit card via various reward plans and cash back offer, but only if they make purchases through those cards. For example:-

  • Many cards offer 5x to 10x rewards points on shopping from various groceries and lifestyle stores or even on online shopping too like SBI simply click credit card. It offers 5X reward points on normal spends and 10X reward points on online spending. Moneyback credit card from HDFC bank offers cash back on the rewards points as well. The reward points earned through your daily shopping course can be utilised by you for further shopping.
  • The credit cards reward mechanism enables the user to save while spending. Every reward points you earn has a monetary value from a minimum of Rs. 0.10 paise to as high as upto Rs.1 that can be redeemed, So it’s quite easy method of saving.

Perks and the Benefits

There are so many complimentary things you can avail with the credit cards:-

  • You can avail complimentary lounge access on most of the premier cards as well as on some other cards. There are also some credit cards specifically giving the lounge perks. HDFC Visa Signature CardSBI Card Prime and Axis Bank Privilege Credit Card are some of the cards you can check for the complimentary lounge access benefits.
  • Credit card also come with the complimentary Golf benefits, which you can avail on any of the Golf Course associated or partnered with the card issuing bank or company.
  • Number of credit cards offers you the free air miles on your flights. So anytime you travel anywhere through air mode you should have any one of the below cards in the pocket to avail the air miles benefits.

Discounts

There are numerous discount offers in the market for credit card holders. Be it the online shopping or any other premier store shopping, you can simply enjoy better discounts offers through credit card rather than a debit card or cash.

  • One of the prime discounts available is on Dining. Many of the credit cards offers Dining discounts on a big chain of participating restaurants with 15% – 25% discount. You can check among some of the below cards for their Dining benefits at least once.

Security

Unlike other modes of payments like a Debit card, credit cards are highly secured financial device. You may not believe but yes credit card do have some amazing safety features:-

Purchase Protection

Purchase protection is a benefit offered by the credit card companies to its user so that if purchased good is damaged or stolen within a specific period of time than a refund for the same is given to the customer. Mostly the purchase protection is for 90 days from the date of purchase. For instance on Diwali you purchased an oven and it suddenly stops working than you should first check your credit card statement and if it has not exceeded 90 days, there is no reason to worry.

Insurance Against Frauds

Your credit card comes insured from the theft and frauds. In case your credit card faces any fraudulent or unauthorised transaction the credit card company will get that paid off from insurance.

Accidental Insurance

Most of the credit cards comes with the accidental insurance coverage. So that in case of accidental death the outstanding amount is waived off and the dependent of card holder gets the claim as well. HDFC bank offers an accidental insurance upto 5 times of the credit limit with a maximum of Rs. 50 Lacs to the card holder if he does 4 transaction of Rs. 100 every month.

Car Rental Insurance

Now if you rent a car and do not want to pay according to the renting companies insurance scheme, you can simply pay through swiping your credit card and you will be entitled for the car rental insurance by the credit card company.

Loans

Credit card with its predefined spending limit, comes with some of more finance options as well:-

Builds Credit History

Maintaining a credit history is very important these days to be able to apply for loans on credit cards. Credit cards are quite helpful in creating the credit history of a consumer. By paying the bills timely, consumers can get into the good books of banks or financial institutions. Customers holding excellent credit history have numerous advantages over the people who have bad credit history or history at all. A good credit score can help in availing loans and banks don’t entertain customers with bad credit history. Hence, credit cards are helpful in building a credit track record.

Even credit card helps you in case you are having a bad credit history, as you can get a secured credit card and then can enhance your credit score consequently by spending and paying on time. One can get a secured credit card even with bad credit history against the fixed deposits or any other form of collateral security.

Interest Free Credit

Most people shy away from credit cards as they do not discover that credit card comes with an interest free credit within the due date of payment. After making a purchase through credit card you only needs to pay the interest when the due date of payment is crossed.

For example, if you purchase a mobile through the credit card and the due date of the payment of your credit card is after 25 days, then you are enjoying an interest free credit for those 25 days. If you make full payment on the due date you would end paying no interest at all.

Balance Transfer Facility

With balance transfer facility on credit cards you can easily move your existing high-interest balances to a new account to save money. Users might have to pay a lower interest rate or 0% interest rate. This further helps in clearing debt faster and even save money. You can also convert the transferred amount in EMI and pay off that in instalments.

Cash Withdrawal Limit

Most of the credit companies provide cash withdrawal facility on credit cards. So that you can withdraw a certain part of your credit card limit in case of any emergency cash requirement situation. These withdrawals can be made in any part of the world and banks may charge certain interest charges. Most of the banks charges around 3% per month on an average for this benefit and maximum cash withdrawal limit can be 25% – 40% of your credit card.

Pre-Approved Loan on Credit Card

Being a credit card owner comes with a lot of advantages. Credit card companies offers pre-approved loan on the basis of your credit card payment history. This loan can be used for urgent purposes and customer does not even have to go through the tedious documentation process. These loan are also cheaper than the usual personal loans by the banks and requires lesser time for the disbursal.

EMI Facility

Credit card comes with the benefit of converting your big purchases into easy EMIs. This can help you a lot as you don’t need to run for a loan to purchase anything. You can make the spending through your credit card and convert the amount into easy EMIs.

Other Benefits

Subscription Benefits

Credit card enables you to get subscription on many of the paid online portals, as most of these portals requests payments only through the credit card. So what your debit card can not do is simply done by your credit card.

Cheaper Foreign Currency Conversion

In case you are abroad, your credit card with the free currency conversion facility can actually make it too smooth to have the required currency in your pocket. Some of the cards offers amazing offers on foreign currency conversions. You can check some of these cards for the foreign transaction purpose. Although they come with heavy annual fee but still it is the most comfortable method.

Benefits on Business Credit Cards

The corporates or even the new start ups looks for the Business credit cards as they are a trustworthy source of making official payments along with enjoying some good benefits on them as well.

High Credit Limit

Business cards usually have a higher limit and allows some extra expenses to be made through them easily. The business usually requires more spending rather than the individuals do. It allows sometimes small business to even finance their small working capital needs also. So the credit car could be a source of urgent capital finance too.

Separate Credit History

Business cards are usually in the name of concerned company or business, so they do not have an impact on the owners credit history, Although they can affect the credit score of the business in a positive direction if the payments are being made timely.Its good for both as business and individual as the credit stories of both remain separate from each other.

Controlled Expenses

Credit card allows the business to control the petty cash expenses made by the employees in day to day affairs like a lunch meeting with the client or a farewell party of retiring employee. All these expenses, If made through credit card goes into accounts book through monthly statement.

Business Perks

Business Credit card comes with exclusive business perks as the credit card companies allows various discounts and perks to the corporate card holders. With SBI Platinum corporate credit card one can make payment on any of 3,25,000 outlets spread across the country.

Interest Free Period upto 50 Days

The credit card companies offers upto 50 days of interest free credit to the corporates, and offers a choice of choosing two EMI dates as well.

Conclusion

So the credit card has as much benefits as we could make out from them. A credit card could be a simple payment tool, insurer, lender anything we want. The benefits are worthy to reconsider your thoughts of not having a credit card. Yes, it have that annual fee, joining fee and some other charges. But, then if you are smart enough to know how to maximise the benefits from your card, you can easily make for these fee and charges.

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