In this modern age, a credit card has become necessary since it is very easy and simple to use with great payback scopes. A credit card provides many deals, offers, and discounts incomparable to many products. However, before using a credit card, knowing the advantages and disadvantages of a credit card would help in choosing the best credit card in India.
Advantages of a Credit Card
You will avail of the following benefits while using credit cards.
Easily Accessible
The biggest pro of availing of a credit card is how easily you can access funds. Choose the best credit card in India and make payments even when you don’t have any money. Credit cards are special because they work on a function of deferred payment. This means you can use the card and pay for your expenses later. It does not affect your bank balance since the money does not leave your account.
EMI Facilitation
You can put it on credit when you have to purchase without spending your savings. By putting it on credit through the card, you can pay off the debt through monthly instalments (EMIs), which ascertain that you do not have to pay what you owe all at once. To pay for your purchases, taking a personal loan has higher liability than EMI payments.
Building on Creditworthiness
With credit cards, you get a good opportunity of building creditworthiness by repaying timely. This can be significant since it permits your bank to view the active credit history of your card based on your card usage and repayments. If you ever need a loan, financial institutions and banks look at your credit history to ascertain your creditworthiness for the loan. This credit history dictates whether your loan application is forwarded for the loaning process.
Offers and Incentives
Most of the credit cards in the market come with various incentives and offers. If you choose the best credit card in India, you can get some of the most attractive offers and incentives possible. The incentives can be anything from reward points to cash back, which is redeemable in the future towards either paying off the outstanding dues of your card or as air miles.
Disadvantages of a Credit Card
There can be some disadvantages of a credit card that you should know.
Hidden Costs
Some hidden charges on credit cards can increase your expenses. Credit cards come with multiple fees and taxes, such as processing fees, renewal fees, joining fees, and late payment fees. If you miss any of your card payments, that could lead to consequences, and your credit limit could be reduced depending on repeated late payments. This overall hurts the prospects of your future credit and credit score.
The Trap of Minimum Due
One of the most significant disadvantages of having a credit card is the minimum due amount shown on the top of any billing statement. When you have a credit card, it may seem that the minimum amount is the due total. However, it is the minimum amount you are expected to pay to continue using the facilities with your credit card. This can lead to your assumption of a low bill and a higher expenditure, increasing the sum you would have to pay off over time.
Easily Overused
With the change in credit cards that occur over time, your bank balance may stay the same, which can tempt you to make every purchase from your credit card. Irrespective of the card you use, this will increase the amount you may owe the bank, and you can be unaware of that. This ends up in a high expense and more debt. This means that you would be on a constant cycle of high-interest rates and debt for any future payment that you make.
Conclusion
Credit cards can have a lot of pros and cons that you need to keep in mind. Users must be careful to enjoy the benefits and avoid the advantages while using the card. You can also try using a credit card app to record your spending and the money you owe.
