The best time to get a credit card is right now

A few months ago, swiping your credit or debit card, for a minor purchase of Rs. 100 would probably draw strange glances from onlookers and vendors alike. However, post-demonetization, consumers have increasingly accepted plastic money (credit and debit cards) and online transactions as the default payment option for the most basic daily transactions.

There are many advantages to using a credit card such as building credit, earning reward points, discounts, cashbacks, etc. Most importantly, in a country where a majority of people belonging to semi-urban, rural and older demographic groups still struggle with the basics of a smartphone, plastic money wins over digital wallets thanks to its sheer convenience and simplicity of use. Instead of linking your bank account to a wallet, inserting OTPs or scanning barcodes, with a credit card, all you have to do is allow the shopkeeper to swipe and you’re done! So, if you are considering getting a credit card, here’s a list of reasons why you should go in for one now:

Easy credit – The biggest advantage of using a credit card is the easy availability of credit. The deferred payment system allows you to use your card at the time of purchase and pay for it in the subsequent month. The money does not leave your account, thus not affecting your bank balance every time you swipe the card. However, one must use this facility judiciously and avoid spending more than they can afford to pay off once the bill is generated. Often, consumers assume that paying the minimum amount due is enough to keep their credit history healthy. However, this is far from the truth. One must ideally use only 30-40% of their credit limit and must pay off the total outstanding balance in each cycle.

Building a line of credit– Credit cards help its users to build up a credit history based on the data from card repayments and usage. Banks and financial institutions look into this information to assess the creditworthiness of a potential loan applicant, making your credit card important for future loan or rental applications. You can also keep a track of your credit score through rating agencies like CIBIL.

Reward points – Debit cards usually offer no or very small rewards. If you have a good credit score, you can get approved for credit cards that offer great signup bonuses and reward points that can be redeemed later as air miles or used towards paying your outstanding card dues. Most lenders also offer discounts on purchases made through a credit card, such as on flight tickets, holidays, or large purchases, helping you save more each time you spend.

Cashbacks – Most banks offer cash bank opportunities ranging from 1-5% if you use your card regularly to pay for electricity, mobile phone bills or purchase groceries. Shopping from e-commerce portals also allows you to get cashback on your purchases of various products.

EMIs – Making big-ticket purchases like high-priced electronics becomes easier with credit cards as you do not have to tap into your savings account, but can opt for affordable monthly instalments. Paying through EMI is cheaper than taking out a personal loan to pay for a purchase, such as a computer or television. Moreover, by converting any high value transaction through your credit card into an EMI, you save yourself from any negative impact on your credit history.

Safety – Credit cards are safer than debit cards in case of frauds, ensuring that you do not lose money from your bank account. Payment gateways like Visa and MasterCard also offer password protection options for transactions making them safer. Also, credit card statements can be used to file and settle claims of fraud.

Authored by: – Mr. Manavjeet Singh, CEO & Founder, Rubique

(The views expressed in this article are by Mr. Manavjeet Singh. doesn’t own any responsibility for it.)

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