What is a Credit Card and Why do you Need to Have One?

What is a Credit Card and Why do you Need to Have One?

A credit card is a financial tool that allows you to borrow money from a financial institution to purchase various goods and services. It is physically similar to a debit card but differs in the process as it utilises a predefined line of credit allocated by the issuer. You spend within that threshold and repay the due amount to the lender.

The best credit cards in India are quickly becoming some of the most preferred modes of alternate currency. The number of credit card transactions at PoS terminals have grown at a rate of 28% year-on-year. Further studies show that the total amount transacted through credit cards have reached Rs. 54,235 Crore in 2018, an increase of almost 29.6% in 12 months from 2017.

There are several financial institutions that offer feature-rich credit cards to eligible applicants. They add several offers and benefits, along with reward programs to entice customers into availing their credit cards. The added convenience and benefits make this financial tool one of the most popular modes of short-term, unsecured finance.

Why use a credit card?

Credit cards offer unmatched convenience as well as several add-on perks making them ideal for today’s financial market. Responsible use can help you learn good financial skills, save money, maintain your savings, and upgrade your financial portfolio.

Let’s take a look at why you should use some of the best credit cards in India.

  • Added perks –

Many credit card companies provide complimentary offers and rewards that allow their customer to benefit from discounts, cashbacks, complimentary airport lounge access, etc. You can also benefit from reward programs that offer gifts and bonuses against your redeemable points. These added perks are one of the most common reasons why people prefer to use credit cards instead of regular debit cards.

Cards like Bajaj Finserv RBL Bank SuperCard offer exclusive benefits like EMI options and discounts on luxury items and goods, reward points against every purchase, welcome gifts, complimentary airport lounge access, fuel surcharge waiver, and many other added benefits to their customers. You can also get a loan against your unused credit limit, interest-free for up to 90 days, to cater to your emergency requirement.

They also bring your pre-approved offers on credit cards, as well as several other financial products, including unsecured advances like personal loans, business loans, secured credits like home loans, etc. You can check your pre-approved offer by sharing only your name and contact details online.

  • Credit score –

Using your credit card is one of the most common and easiest methods of building a good credit score. A good credit score shows your creditworthiness and increases chances of approval when you apply for a loan in the future. Credit bureaus are likely to consider you as a responsible borrower if you maintain a timely repayment schedule, low credit utilisation ratio, and no defaults.

  • Safety –

Another reason why many prefer the credit cards over cash and debit card is because of its added security measures. Any theft or unauthorised transactions in your credit card account will not deplete money from your savings. Moreover, you can challenge any unauthorised transactions, in which case your card will be closed while the amount will be reimbursed.

Some of the best credit cards in India also come with several layers of security features. For example, SuperCard offers ‘In-hand security’ and ‘Zero-fraud liability cover’ that eliminates any threats of unauthorised deductions as well as cyber crimes. You can also control and overview your credit card usage via the RBL MyCard application, which adds further convenience for the cardholder.India’s financial market is well aware of what is a credit card and how to reap the best benefits from such a financial tool. The above mentioned reasons show why credit cards have gained popularity over the last few years, and are likely to become one of the primary modes of transaction in the near future.

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Gaurav khanna is an experienced financial advisor, digital marketer and writer who is well known for his ability to predict market trends. You can find Gaurav on Linkedin.

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