Being the most convenient financial tool, credit cards have always been a great way to manage your budget. Understanding the pros and cons of credit cards is an essential step in using a credit card.
With just a few minutes of research, you can learn how to use your credit card responsibly and protect your credit score and financial well-being. However, there are no shortcuts. Putting these into practice takes time and effort, but you can soon be well on your journey to improving your financial health. It all starts with understanding that while there are numerous benefits of using credit cards there are a few drawbacks as well.
Pros of Using a Credit Card
Plastic money has become an essential financial tool in today’s world, which is why it’s crucial to understand all its features fully. Here are some benefits you can enjoy with your credit card:
Convenience
A credit card gives you a higher spending power, easing your purchases. You can understand it better with this example: Say you earn ₹1 lakh a month. With a flawless credit score and history, your credit card limit could be ₹3 lakhs, which is an excellent option to manage your finances.
Flexibility
In addition to convenience, you can also enjoy flexibility. This means you have the freedom to use this amount in the way you prefer. Starting from cash advances to EMI conversions, you can choose how you want to utilise your credit card limit. This way, you can address emergencies such vehicular repair or a loss of job or even an injury with ease.
Security
Credit cards offer not only purchase protection but also a range of safety features and insurance coverage. From travel insurance to different types of consumer protection covers, credit cards provide a safety net in case of any fraud or financial loss.
Zero Interest Rates
Whether during the introductory period or all through your usage, you can take advantage of zero interest rates for EMI conversions or cash advances. This feature allows you to save money without your interest charges impacting your credit card bill. Check which cards offer this feature and get it to make your life all the better!
Exclusive Offers
Each credit card comes with exclusive offers and discounts that you can use to your advantage. If you use your credit card wisely and keep an eye out for the deals, you can earn more rewards. This approach will help you access exclusive offers to help you buy the products you’ve been wishing for while saving money.
Credit Score
The more you use your credit card and pay your bills on time, the better your credit score will become. An improved credit score will make you eligible for higher credit limits and exclusive offers, including lower interest rates on future credit.
Cons of Using a Credit Card
While credit cards offer many benefits, improper use can lead to some drawbacks. These include:
- Risk of Overspending – The risk of spending impulsively can occur with such cards
- Chances of Being in Debt – Once you begin to overspend, it can lead to falling into a debt trap
- Variable Interest Rates – Not all your debts will accrue the same interest rate, which makes the process challenging
- Fees – The charges on your credit card can also burden your finances
Best Credit Card Practices to Optimise Your Usage
By understanding the pros and cons of credit cards, you can adopt the best practices for using your card effectively. This will ensure you avoid falling into debt and maintain financial stability. To achieve this, follow these strategies, which will help you pay your bills on time and prevent additional interest charges from accumulating on your outstanding balance.
The best practices are:
- Set up payment alerts to avoid missing your credit card payments
- Use autopayment for all credit card bill payments
- Pay at least pay the minimum due to avoid late charges
- Do not go overboard once you get your credit card
- Spend within your monthly budget
- Use EMI conversion for big-ticket purchases
- Do not use EMI if you have an existing debt
- Know your credit card fees and interest rates
- Check your credit card balance frequently
- Check your credit score frequently
By following these practices, you can effectively manage your credit card and make the most of its benefits. Not only will this help improve your credit score, but it will also elevate your credit card experience. When choosing a credit card, ensure you select one that allows you to get more benefits and costs you the least to maintain.
A lifetime-free credit card like the One Credit Card is a great option. With this card, you do not have to pay any joining or annual charges. This ensures you don’t have to pay anything extra to maintain your credit card. Additionally, the rewards you earn will contribute to improved savings.
With this credit card, you get a fuel surcharge waiver along with discounts on dining and travelling. Moreover, you can earn 5X rewards on your top two spending categories. This credit card also comes with a powerful app that makes it easier for you to track your monthly expenses and set budget limits. Apply now to enjoy this stylish metal credit card.
