Credit cards have become an integral part of our financial lives. When used responsibly, credit cards can provide numerous benefits that can make your life easier and more convenient. In this blog, we’ll explore some significant benefits of using credit cards.
1. Financial Flexibility and Convenience
One of the biggest advantages of credit cards is their financial flexibility and convenience. With a credit card, you don’t need to carry cash everywhere you go. You can use your card to pay for purchases big and small, online and in stores.
This saves you the hassle of having to withdraw cash before every expense. You also don’t need to worry if you are short on money at any given moment – you can use your credit card.
2. Building and Improving Credit Scores
Using a credit card responsibly can help build your credit score over time. Your credit score is important because lenders use it to evaluate your creditworthiness. The higher your score, the better interest rates and loan terms you can qualify for.
Making on-time payments every month demonstrates that you are a reliable borrower and contributes to an improved credit history. In contrast, missing payments can drastically lower your credit score and make borrowing more expensive.
3. Rewards and Cashback Programs
Many credit cards offer attractive rewards programs and cashback on purchases. Rewards can include points, miles, cashback, and more on every dollar you spend. These rewards can then be redeemed for statement credits, merchandise, gift cards, airline tickets, hotel stays, and much more.
The right travel rewards credit card allows you to take free vacations with your family, using points earned through your normal spending. Cashback credit cards put money directly into your wallet on everything you buy.
4. Purchase Protection and Extended Warranties
Credit cards provide various purchase protections and extended warranty coverage for items you buy with your card. For example, purchases are often covered if the item is damaged or stolen within a specific time frame after purchase. You may also get extended warranty protection beyond the manufacturer’s warranty. This can protect you from costly repairs or replacing items that break or fail sooner than expected. Credit card purchase protection can save you money and give you extra peace of mind.
5. Automatic Payments for Recurring Bills
One of the useful benefits of credit cards is the ability to set up standing instructions for automatic payments towards recurring expenses. Once you set up standing instructions, the credit card provider will automatically pay the bills from your credit card as and when they come due every month. This saves you the hassle of manually making payments each month.
6. Travel Benefits and Perks
If you travel frequently, many credit cards offer valuable benefits and perks that can improve your travel experience. These can include free checked baggage on flights, airline priority boarding, discounts or upgrades at hotels, rental car insurance, airport lounge access, and more.
Travel points earned through credit card rewards programs can be used to book free flights and hotel rooms. For frequent travellers, these benefits can add up substantially over time to reduce the cost of travel.
7. Interest-free Periods and Balance Transfers
Most credit cards offer interest-free credit on purchases. You pay no interest charges as long as your outstanding balance is paid in full each month by the due date. This grace period allows responsible credit card users to access short-term financing for free.
Over time, a history of on-time credit card bill payments demonstrates good financial habits and allows you to qualify for better credit cards with higher limits and attractive rewards programs.
8. Emergency Funds
Having access to credit cards can also help you deal with unexpected emergencies. Most households need meaningful emergency savings. A large unexpected home repair, medical bill, or major car repair can be financially devastating without a credit card. Credit cards give users access to revolving lines of credit that can be used for emergency financing. While credit card debt is expensive in the long term, having it as a backup emergency funding option helps many households avoid even worse situations when disaster strikes.
Just be sure to have a plan to pay off any balances incurred over time. The goal with credit card emergencies should be to bridge the gap until you can free up cash through other means.
9. Additional Perks and Benefits
Many credit cards offer additional perks and benefits, such as concierge services for booking travel, discounts on everyday purchases, free access to airport lounges, special financing offers, and more. These extra perks and deals can add up depending on your spending habits and lifestyle.
Be sure to take advantage of all the benefits that may be available with your credit cards to maximise their overall value in your financial life.
Conclusion
Credit cards can provide many valuable financial benefits when used wisely in a responsible financial plan. Convenience, flexibility, emergency backup, free travel, cashback rewards, purchase protections, and fraud security are just a few reasons credit cards have become so ubiquitous today. Maximising these advantages while avoiding interest charges and overspending is critical to harnessing the full benefits of credit cards in both the short and long run.
Visit AU Small Finance Bank website today to know more about credit cards!