27 JANUARY, 2022

When it comes to payment options, debit cards, credit cards, and cash have always been pitted against each other on multiple parameters. Some prefer cash and debit cards as it helps them stay within the budget and not overstep the financial boundary, they’ve set for themselves. While on the other side, a credit card is believed to make a borrower overspend on frivolous or unnecessary stuff because they take it as easy cash. However, the decision of spending totally lies with the user as they are the ones to repay the borrowed amount later.

Shunning preconceived notions, a credit card can come across as a beneficial tool if used responsibly. A credit card is a great financial tool that comes in handy in times of monetary crunch and offers instant financing to be repaid later in instalments or in whole. A credit card is a must-have to access credit card loans, build a credit history, improve your credit score, avail rewards and bonuses, and so on.

Here are 5 major reasons to use your best credit card for shopping:

Credit Card Benefits

1. Credit Cards Help Build Credit History

A credit score is nothing but a record of your credit account and the subsequent activities like application, payment, utilisation, length, and eventful history. Since a credit card and its history forms an essential part of your credit score, it is important to have the best credit card that helps you build your credit history.

If you have a credit card and use it responsibly, it goes on to build a strong credit profile and thus increase your chances of availing of loans in the future. Every activity done on your credit card is reported to the credit bureaus that eventually becomes a part of your credit history. In the absence of a credit card, there will be no credit history and no lender or bank will be willing to approve you of a loan or credit card.

2. Credit Cards Offer Easy Access to Credit

The biggest benefit of using a credit card is undoubtedly the easy access to credit. There are times when you’re short of immediate funds but have some bills or expenses lined up. Credit cards come in handy in such situations as they work on a deferred payment basis. You can use the credit card now to handle the bills at hand and pay for them later. This is significantly helpful when you’re away from your payday and the expenses can’t be postponed till then.

3. Credit Card Purchases Can be Scattered Over EMIs

The best part about using your credit card extensively for transactions is you can scatter the number of purchases over time into convenient EMIs. If you wish to go for a big-ticket purchase but don’t want to dip into your savings to pay for it all at once, you can use a credit card and convert the entire amount into convenient EMIs. Paying via credit card EMIs is a cheaper option than availing of a personal loan as several banks offer no-cost EMIs on most consumer durable products and gadgets.

4. Rewards & Offers

Most credit cards are packed with exciting rewards, offers, and deals on the transactions you do. The model works in a way that on every purchase made via your credit card, you end up earning reward points which you can redeem later for more exciting deals and discounts.

Also, during festive times, most retail and online stores have fantastic discounts and exclusive offers for credit card customers on their merchandise. Moreover, you can even earn reward points on credit card bill payments and redeem them for exciting products. Overall, transacting on your credit card is a win-win for everyone.

5. Flexible No-Interest Free Credit Period

All credit cards come with an interest-free period of initial 45-60 days from the date of purchase. This implies that you’re free to transact on your credit card during that period and you’ll not be charged any interest during that period. This short-term credit period of up to 60 days is kind of a short-term credit card loan that you can benefit from without having to pay any charges for it. However, it is advisable to pay the outstanding amount in full after the period gets over to attract any interest charges or late penalties.

Using your credit card in the right manner is the key to reaping its numerous advantages without landing in a pit of debt. Adopting some wise tips and tricks to make the most out of your credit card makes sure you end up building a healthy credit score and history for yourself to come in handy in the future when you wish to avail of loans and new credit cards. Use the above credit card benefits to your advantage and enjoy a stress-free credit card journey!

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.