Why credit card is the best gift from banks

Woah! some guys may find it outrageous for that statement, but yes, I stick to my title.

Here are the benefits -

  1.   Interest free spending – Most credit cards give a 45-day free credit period. With a limit of Rs.1.5 lakh, it comes to upto Rs.3000 monthly savings on interest if used.
  2. Forget about tracking expenses – use credit cards. I use credit cards wherever possible, recording all my spending. I don’t waste time tracking all my expenses, my credit card statement does it for me. Some credit card statements even categorize the spending based on the merchant. Time saved is money earned
  3. Find your monthly expenses in a few minutes – Take your bank statement, add your cash ATM withdrawals, add to credit card bills and there you go that’s your monthly spend. Check for three months to get your average spending
  4. Builds me a better credit rating: Yes, timely credit card payments are recorded in CIBIL score which banks look at to determine your credit rating. If you don’t have any loan history, this record will show that you are credible guy to lend
  5. Credit card companies offer cash back or reward points which can be enchased later or exchanged for some coupons/items. They may not be much but over time accumulates to good amount
  6. Negotiate with the credit card company executives to pay you reward points for the annual fees you pay. Considering the movie tickets off, airport lounge and several other benefits from Signature cards, it’s a great deal if your lifestyle matches with that spending.  Chose the one which fits into your regular spending, not the one which they offer in the name of rewards
  7. Maintain two credit cards at different cycles – one of my card comes for payment on 8th and another on 30th. I use one card for first 15 days and the other one for next 15. It means I end up delaying payment for more than month.
  8. Manage your urgent cash requirement: This is the one which gives the biggest bang for the buck. Having credit cards allows me to not to maintain any cash in my savings account and put it to better use instead. With credit cards accepted everywhere; in any urgent circumstance, I just use them. And it gives me more than a month to accumulate funds for it

For all those benefits, the only thing I must be very careful is to pay bills on time; else it might screw up my CIBIL score or put penalties. Even to prevent this, all I need is to set auto-pay in your bank account to pay the entire bill itself. That will keep that worry away.

So with all those benefits listed above, do you really think credit cards are bad?

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Disclaimer: This article is for educational purposes only and is not an investment advice / financial advice and should not be construed as such. Decisions taken are solely at your own risk. Read disclosures page for more details.

     

3 Comments on “Why credit card is the best gift from banks

    1. There are lots of cards that doesn’t come up with fees. Also, the card companies that charge annual fee offer reward points in-lieu of the fees which can converted to cash.

      The delay in one month is valuable in the sense, say I do big spending or some emergency hospital expenses, I have one month time to arrange that money, while its interest free till then. Imagine at the times of medical emergencies or others, having 1-2 lakh ready with no interest is a huge relief.

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