Credit Card Benefits - Find out the various benefits that you can avail from a Credit card. Also, know the benefits of upgrading your credit card at Moneycontrol.
If you own a credit card, you automatically have some benefits associated with that card. Credit card benefits is one of the most popular reasons why people opt for a credit card in the first place. With credit card benefits, your shopping experience becomes better. Credit cards are great alternatives to cash and since they are globally accepted, you can move around freely without worrying about currency conversions.
With a credit card in hand, your purchasing power increases as you can borrow money for your big purchases instantly. You can purchase goods, pay for food, take care of your medical expenses, pay for your travel and other lifestyle products and services.
In simple terms, it is a loan that is credit to your account immediately. On top of it, the cards offer attractive rewards and offers on your purchases.
Here’s a list of credit card benefits:
People opt for credits cards for various reasons. The benefits of credit cards are many. Here we delve into some of the greatest advantages of having a credit card:
- Shopping experience: Credit cards have redefined the shopping experience for cardholders. The cards make shopping easier. One can make big purchases for home needs and appliances using a credit card without having to take a hit on their monthly budget. Credit cards let consumers buy products on low-cost EMIs. Credit cards operate on the ‘buy now, pay later’ principle which works well for salaried individuals with fixed monthly salaries.
- Alternative to cash: Credit cards eliminate the need for carrying cash around for shopping. In fact there is no need to pay for any product or service using cash if you have a credit card. You can swipe it at a point of sale machine or use online or mobile banking to make payments.
- Rewards, cashbacks and offers: All credit cards offer special discounts, cashbacks or reward points for the purchases made using a credit card. Some cards are offered in association with some retailers and shopping website. There are many which are in association with travel websites. They offer special discount on shopping or travel tickets and accommodation. So paying with a credit card may ultimately be cheaper than paying with a debit card or cash. Many credits also have lucrative welcome offers that the customer gets upon joining.
- ATM withdrawals: Much like a debit card, the credit card allows its customers to withdraw cash in case of need. A small fee is charged for cash withdrawals on credit cards. However, many banks and financial institutions also award reward points for cash withdrawals.
- Accepted worldwide: Credit cards are a commonly accepted mode of payment across the world. The world is your oyster if you have a credit card. With a credit card in hand, you can pay with ease in foreign countries. This makes travelling around the world convenient as the cardholder need not worry about currency conversions.
- Immediate exigencies: In case of a medical emergency for you or your family, the credit card comes in handy. You need not worry about arranging funds for medical bills as you can pay using credit cards.
- Credit score: Credit cards are also a great way of improving your credit score. The credit score is a three-digit score calculated based on your credits and how well you pay them back. Most banks and financial institutions take into account an individual’s credit score while deciding whether the individual is eligible for a loan. If you have a credit card and you pay your credit on time, it is likely to improve your credit score.
Benefits of upgrading your credit card
If you’ve had a basic credit card long enough, it may be time for you to get an upgrade. Banks and financial institutions usually issue a basic credit card with fewer benefits for a first-time customer. If the credit score of the customer is good enough, the banks then offer customers an ‘upgrade’ to a premium one with more features and benefits.
If you have a good credit score for six straight months, you are eligible for an upgrade. You can then choose from a host of credit cards based on your needs. The premium credit cards have more offers and the reward points have a higher conversion rate. You credit limit will be higher. You can get more exclusive offers on travel, dining and other lifestyle products.
Some premium cards offer access to airport lounges, while others may offer discounts on airfares. An upgrade works better for people who shop frequently or travel frequently. Credit cards offer lower prices and higher rewards for such people.
When is a credit card useful?
A credit card is useful when you want to buy a product or service now and pay for it later. A credit card issues you an immediate loan. You have to pay the loan within the due date. An interest is charged if the loan is not paid within the due date. So you use a credit card to pay for anything while you wait for your salary. You can purchase the item immediately and payback the loan once you get the salary.
Will a credit card add to my financial burden?
A credit card must be used with responsibility. If credit balance is paid off on or before the due date, it will not be a financial burden at all. However, if you default on your credit, an interest will be charged on your balance. That may add to your financial burden. However, as mentioned earlier, it can be avoided by making timely payments.
How do I ensure a good credit score?
Maintaining a good credit score is simple. The secret is to make timely payments. If you pay your outstanding within the time specified by the bank or the financial institution, you can, your credit score will be good. If you falter, your credit score might go down.
When can I apply for an upgrade for a credit card?
If you have had a good credit score for six months at a time, you are eligible for an upgrade on your credit card. You can approach your bank executive to get details on the cards available for you.