What Are Credit Cards And Why To Apply For Them?

With the advent of plastic money and digital banking, a credit card has become a very commonplace item for people to have in their wallets. Understanding what a credit card is and what are the features can help to understand which credit card to apply for.

A credit card is a type of card that lets you borrow up to a certain limit (the pre decided credit limit of the card) from the bank for your purchases. This has to be repaid before the due date which is generally 25 to 30 days after the end of the month in which spends are made. For example, the due date for spends made in December would be 25^th January or something similar.

Credit cards can be swiped at POS terminals with merchants or used for online transactions. Some credit cards can even be used internationally for making purchases.

Because credit cards give you credit and the freedom to swipe and use in a wide range of transactions, they come with an annual charge. This charge depends on the benefits that come with the card. The higher the benefits and rewards, the higher is the annual fee. Typically, credit cards come with their own point system which can then be redeemed for free air tickets, discounts in restaurants, in outlets etc. 

With many credit card companies offering different cards, it has become easy to apply for credit card both online and offline. If you don’t have a credit card, it is best to apply credit card online and get yourself this important piece of plastic money.

Here are 5 reasons to apply for a credit card:

It builds your credit score:
One of the strongest reasons to apply for credit card is that it builds your credit score. A credit score is a snapshot of your financial history and is frequently referred to by lenders to identify the credit worthiness of a person. Making spends on the credit card and then paying off the bills on time can help the credit bureau build a credit history for the person.

Emergency funds:
A credit card is one of the best sources of funds in an emergency. It can be swiped up to the credit limit to immediately provide funds. Credit cards also allow the user to withdraw funds in case of emergency or take loans against the credit limit which can be very helpful in emergencies.

Points and airline miles:
Depending on the type of credit card and the bank, each transaction will earn you either points or airline miles. These can be redeemed for benefits in the future in the form of cashbacks, reward flights, hotel stays etc. Depending on the reward system of the card, you can apply credit card online such that your spends give you high benefits.

Offers and discounts:

Many credit card companies tie up with merchants to offer discounts and other benefits especially during sale periods and other offers by merchants and e-commerce platforms. Co-brand credit cards provide benefits and discounts when swiped at the brand for example, IRCTC credit card gives discounts on train tickets which can help a frequent traveller.

Grace period:Credit cards come with a grace period. A transaction done in one month is payable at the end of the next month, thus giving a grace period of almost 60 days. This type of interest free borrowing can be used beneficially to spend money without paying interest on it.