Thinking of Applying for a Credit Cards?
You want to own a credit card but certain questions are arising in your mind
What is a credit card?
Is it safe?
Should I have one?
Is it affordable?
Do I pay fees to get it?
Am I eligible for one?
Positives and Negatives of Owning a Credit Card
When you pay using a credit card, money is not taken from your account rather you take on a short-term loan from the card issuing bank. This loan may or may not amass interest if payments are made in time. You usually get an interest-free grace period of 30 days to make the payments.
Use a card sensibly and always try to pay the full amount on time as by paying lesser than your billed amount you will have to pay an additional amount as interest later.
Partial payments once or twice are ok if planned; if you make it a habit and your expenses are more than your earnings sooner or later the charm of using a credit card will vanish.
There are cards that attract annual fees and there are cards that are free. It depends on you which one you choose as per your requirement.
You can get a host of discounts, privileges, and rewards from the cards you choose, especially co-branded cards (A credit card that is offered by a credit card company in association with a retail merchant). For example, a co-branded travel rewards card generally gets you 2-5% off on your purchases and can fetch free air miles for frequent flyers.
You must have some people speaking good about cards and on the other hand, few swear not to have one.
In most cases, the ones who hate credit cards are the defaulters who have misused their cards and have already lost the eligibility to own one. The remaining ones don’t opt for it willfully or due to lack of knowledge about cards.
The truth is that you can get done without a credit card but if you can manage a card properly, it can turn into a very beneficial day-to-day tool in your life.
If you pay the credit card bills on time it can definitely act as an asset but if you default or make late payments, then it can turn into a liability for the one who owns it.
The world has changed dramatically and we all are living in the digital age and to have a credit card today is not a luxury but a necessity.
Credit Cards are Different from Debit Cards and Come with Numerous Benefits
- Improve Credit Ratings – Credit Card helps you to build credit. In long-term, if you use a card and make the payments timely, your credit score ratings improve and you can easily qualify for housing, car or a personal loan.
- Purchase Benefits – You can get benefitted from online purchases if you own a card and manage it properly. Online stores offer discounts and cash backs to credit card users from time to time to maximize their sales and the discounts or cash backs can be quite lucrative anywhere between 5-15%. You should really have one for the festive seasons as this is the time when you make the maximum purchases and save a lot using a card.
- Reward Points – By using your card wisely and making purchases you get reward points from the issuing bank that can be redeemed in lieu of discount coupons, gifts, and other attractive offers.
- Plastic Money – A card makes you secure as you don’t have to carry cash all the time, plastic money makes your buying experience a lot simpler and easy. You carry peace of mind while carrying a card with you and even if it gets lost, you can get it blocked immediately by informing the issuing bank.
- Loans – It can be very useful in time of an emergency as you can take a short-term loan on a card at minimal interest rate without many hassles.
- Free Insurance -Some credit cards come with free purchase protection for a short period after you buy. Others offer you accidental or life insurance as part of the package or against a nominal fee.
- Balance Transfer – If you own two cards, you can move balances you have accumulated from one card to and enjoy an interest-free period while you repay it. You can also convert the amount in easy monthly installments (EMI) at nominal interest rates.
The bottom Line
To get the maximum advantage from your credit card always make payments on time and never misuse it. Remember, if you default on one card no bank will issue you another.