Why It Is Best To Use Credit Instead Of Cash Payments
When compared to paying with cash, using credit card for your payments offers you more benefits than you can ever imagine. Indians in general are wary of using credit cards. Some hate them outright.
While a few percentage of the population have got into big trouble because they had used it irresponsibly or in the wrong way, it does not imply that it is dangerous.
In fact, credit cards come with a whole lot of possibilities. Let us look into the reasons as to why credit scores over cash payments.
Care free travel and shopping
Whether you are travelling within the country or abroad, paying for expenses with cash is cumbersome and not safe. On the other hand, with a credit card you can easily see to your major and minor expenses without having to carry cash in hand.
A card is very handy, when you want to shop abroad. For instance, if you want to get an expensive camera for your son that costs around $2000 ( which is about 1,20,000), you will not have so much cash in hand. A debit card would not give you such a huge amount, as banks set limits on withdrawals per day.
With a credit card, you can easily pay regardless of where you are.
Keep your money safe
When you carry cash in hand, there is always the risk of the money being stolen or lost. Once this happens you will not be able to get it back.
But with credit card theft, you can report the theft immediately and get it replaced. Okay, so you need to pay a nominal amount for getting a new one, but with cash there is no such guarantee.
Improve your credit score
If you are applying for a car, home or business loan, having a good credit score makes the process easier. Unfortunately with a debit card or cash transaction, you cannot build your credit score.
This is because such transactions will not be reported to CIBIL (Credit Information Bureau of India Limit) and to other such credit bureaus. If you have a damaged credit score or want to build your score further, using credit card for all your purchases and bills is the only way.
Since the way you use your credit card reflects on your specific credit behavior and payment patterns,it is easier to know about your financial status and discipline on which the credit score is based.
Rewards and offers
Almost all credit cards come with some or other reward points and benefits. Actually the credit card companies use such deals to attract more people into signing up for the credit cards. This way they try to get a profit from the interest rates and other charges, which compensates for the money they spend towards the rewards and benefits.
But what most people don’t know about credit card use is that you can make money out of your credit card. When you repay regularly the entire balance every month, you will not have to pay any interest or fee. The extra amount you get as rewards for spending is your gain.
When you choose the appropriate card offering rewards that suit your lifestyle you can benefit more. For instance, if you are a frequent traveller you can use a card that offers travel rewards.
For those who prefer cash back, the cards with cash back as rewards are best. Whatever card you choose, ensure that it is used to the maximum, so you benefit from the rewards.
Most credit card companies and banks that issue such cards tie up with ecommerce sites, ticketing websites, restaurants, malls, retailers etc., so you can redeem your reward points by buying from the wide range of offers.
Ease of use
Most credit cards have an average lower credit limit of 50,000 INR or 1, 00,000 INR easily. With this type of limit, you can refrain from carrying around cash. Further if you are short of money especially towards the end of the month, your card lets you buy without any hassle.
Even while repaying, if you pay the required minimum limit that is due on the card, you can continue using the card. But make sure this happens only as an exception and not a regular habit, as it can affect your credit score and get you into financial trouble in no time.