Top Benefits of Using a Credit Card

If you are starting your journey to improve your personal finance, you may have considered owning a credit card. You must have at least got a communication from a customer service person trying to sell you a credit card. So, the questions you might be having is what is a credit card, what are its benefits and what should you know before owning one.

What is a credit card?

A credit card is simply a financial tool that lets you purchase products and services on credit. When you use a credit card to make a purchase, you in fact borrow money from the financial institution that issued the card to you. You are required to repay the borrowed funds within a specified time frame. If not, you would have to pay a certain percentage of interest to your card company.

With a credit card, you can purchase products and services and pay for them later. This can be highly useful for times when you absolutely need to make a purchase but are short on cash. And that interest may be a bit high.

Financial institutions providing credit cards let you borrow money under a limit called your credit limit. It is decided based on your income, age, etc. You can make as many purchases as you want using your credit card under your credit limit. Once you’ve reached the limit, you can use the card again only after you repay your dues. You can apply for credit cards online or at your preferred bank. 

Now that you know how a credit card works, let’s jump on to what it offers you.

Benefits of using a credit card

Below are the benefits of using a credit card:

1.             You can buy stuff and pay for services on credit for a specific interest-free period

The main benefit of having a credit card is that you can make purchases even while not having the required funds. Also, you are not charged any interest on your outstanding credit for the interest-free period. It may range from 45 to 60 days.

2.             You don’t have to carry cash around to pay for products or services worldwide

Even when you have to make a large payment, you can do so easily with a credit card. You get easy access to funds, and you can also pay for your purchases later with credit cards. 

You can use your credit card to pay for products or services worldwide. Credit cards are one of the most accepted modes of payment across the world.

3.             You get amazing rewards, discounts, and cashbacks with credit cards

When you use a credit card to make purchases, you get the best rewards out there in the form of discounts and cashbacks. The credit cards with rewards can severely reduce the cost of your future purchases such as on flight tickets, petrol purchases or shopping.

4.             You can track your expenses daily

Every time you make a purchase using your credit card, you get an alert. You also get a monthly statement containing the details of all your spends, which makes tracking your expenses very easy.

If you make a habit of making all your purchases using your credit card, you can track your expenditures and improve your spending.

5.             You can make big purchases with your credit card’s EMI Facility

If you want to make a big purchase without affecting your bank balance, credit card EMI is the convenient option for you. You’d need to pay interest on the money borrowed only if you are not able to repay it in the interest-free period. 

6.             You can really improve your credit score

One of the best benefits of using a credit card is that you can use it improve your credit score. With a good CIBIL score, when you apply for a loan in the future, there would be high chances of it getting passed. Just don’t forget to pay your credit card bills on time!

Final Word

A credit card is one of the best payment methods you can use. On top of being able to make spends on credit, you can even enjoy amazing rewards and discounts for using your card while building your credit score.

Altura Plus Card from AU Bank offers many amazing benefits. Altura Plus Card offers great rewards and cashbacks on your purchases using the card. Make the most of credit cards by using them smartly, avoiding overspending and making bill payments on time.