Credit cards, when employed smartly and responsibly, could prove to be superb tools of funds management. They also provide several positive aspects that could be incredibly useful when we face monetary challenges. However, the bottom-line remains that you will have to never ever breach your month-to-month price range for card spends and guarantee you normally clear your total outstanding, not just the minimum quantity due, in the course of the billing cycles just about every month. Incomplete and late payments would attract added interest charges that could offset any positive aspects earned via your card.
That getting stated, right here are a couple of motives why your credit card could be your ideal buddy in the course of financially difficult instances.
Provide added liquidity to bail you out of monetary emergencies
Credit cards come with credit limits that provide quick-term added liquidity, one thing that could be immensely valuable in the course of monetary emergencies. You can make use of it in booking urgent flight tickets or producing any significant-ticket purchases. Now, lots of credit card customers are also eligible for immediate card-linked pre-authorized loans that normally involve speedy disbursal which could also support in bailing us out of money-crunch circumstances. The EMIs of such a loan get added to your month-to-month outstanding dues. Many significant-ticket purchases produced via credit cards are also eligible for uncomplicated EMI conversions producing them a lot easier to afford and repay. That getting stated, never ever invest more than what you could repay in time and get total clarity about interest charges just before signing up for a pre-authorized loan or an uncomplicated EMI facility. Also, you may not want to take into consideration going for direct money withdrawal facility from credit cards even in the course of emergencies as these involve steep interest charges and do not come with interest-no cost repayment periods.
Interest-no cost periods give more time to clear your dues
Credit cards in India come with interest-no cost periods ranging involving 20-60 days. Repayments produced in the course of this grace period do not attract interest charges or late payment penalties. Now, this facility offers an added lifeline to card customers in producing their crucial or non-crucial payments and purchases even if they are going via a quick-term money crunch triggered by earnings delays.
Help in enhancing credit score
Difficult monetary phases typically force folks to take unplanned loans which they struggle to repay in time. This adversely impacts their credit score which undermines their probabilities of having the ideal accessible loan delivers in the future. Now, timely repaying your total credit card dues can progressively support in enhancing your credit score. Disciplined card usage on a constant basis showcases credit duty that holds you in superior stead when you are applying for a important financing facility, like a individual loan or a household loan, in the future.
Card positive aspects and privileges support you save more on your expenditures
Most credit cards come with their personal set of positive aspects that could support you save more on your day-to-day expenditures which develop into even more valuable in the course of phases that demand tightening of purse strings. These positive aspects could be in the type of cashback on groceries, on the web purchases or utility bill payments, reward points that could be redeemed to get discounts on emergency flight or hotel bookings, and so on. Not just that, typically particular credit cards qualify for immediate specific discounts on purchases produced at participating e-commerce web sites, travel and flight portals, departmental retailers, supermarkets, and so on. Moreover, lots of credit cards come with added privileges that could increase your savings. For instance, complimentary lounge accesses, no cost travel insurance coverage coverage and specific discounts with participating hotel chains and airline providers could be of immense support in the course of emergency travels.
However, you will be nicely-advised to pick a card whose positive aspects are ideal in line with your one of a kind spending patterns to reap maximum rewards without having breaching your price range. Also, get total clarity about rewards riders like cashback caps, reward points validity and conversion selections and prices, participating merchants, and so on. to maximise savings.
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Final thoughts
As such, sensible use of credit cards could support us in several techniques, specifically in the course of difficult instances. It will not be incorrect to argue that credit card positive aspects like get now spend later, interest-no cost periods, cashbacks, specific discounts, reward points, uncomplicated EMIs, pre-authorized loans, and so on. make them more valuable than other payment channels like debit cards or UPI. However, credit cards need to never ever be mistaken for earnings extension but only an ultra-quick-term earnings replacement. The dues will have to be cleared in complete on time on a normal basis. So, monetary discipline is the important to maximising the positive aspects of these rather sophisticated tools.