I am a 22-year-old professional working at an MNC and want to know the benefits of getting a credit card?
—Name withheld on request
Being a young earner, this is an ideal time for you to start building a robust credit bureau score, and also start monetizing your spends by leveraging credit cards with a plethora of features such as lucrative reward points and cashback incentives.
This wiser move will not only help in some monthly savings on essential purchases like groceries, fuel and other online expenses, but will also contribute towards obtaining a high-quality credit bureau score. This, in turn, would have a cascading effect on procuring other loans in the future, where loan pricing may be linked to credit score. Due to the interest-free grace period provided by credit cards, there is also the added benefit of deferring expenses for up to 45–50 days, which further enhances the value proposition. Do note that credit cards incur tremendous interest rates if you don’t pay bills on time. So, make use of credit cards wisely and reap their benefits.
Shailendra Singh is managing director and chief executive officer, BOB Financial Solutions Limited.