Credit cards are suitable financial products for instant money for everyday purchases such as gas, groceries, and other goods and services. Also, one can use it to purchase big-ticket items such as TVs, travel packages, and jewelry since the funds for these items may not always be immediately available. Some more credit cards’ benefits include:
Experts in personal finance spend a lot of time trying to prevent us from using credit cards, and for a good reason—one of the reasons being that many of us use credit cards irresponsibly and end up falling into debt. However, contrary to popular belief, if you’re using this plastic card responsibly, you’re much better off paying with a credit card than you are with a debit card hence keeping your cash transactions to a minimum. Here’s why your trusty credit card comes out on top, and specific credit card uses and strategies to employ:
The main difference between a debit and a credit card is that debit cards are directly linked to a money market or checking account and deducted from the available balance in those accounts. As a result, there is no monthly bill or interest charges because there is no money due after the transaction, unlike a credit card. As a bonus, credit cards allow you to build your credit score, while debit cards rarely do.
There is nothing like an initial bonus opportunity when you get a new credit card. Often, applicants with good credit or excellent credit can get approved for credit cards that offer bonuses worth a lot of money or more in exchange for spending a certain amount in the first several months of the account being open.
Other cards offer applicants bonus reward points or miles that you can redeem for travel, gifts cards, merchandise, statement credits, or checks. However, the standard debit card with a bank account does not usually offer any bonus or ongoing rewards.
Credit cards have an instant credit line, the maximum amount of credit available to purchase. The credit history, income, and the amount of their current available credit they are using determine the amount of credit available to a person. As one makes purchases, the available balance is the amount used to spend at that given moment. For example, if someone has an Rs.1,000 credit line but makes an Rs. 200 purchase, they will have Rs.800 as an available balance.
Many credit cards offer up to two percent cashback. Using credit cards responsibly can help you earn rewards, travel, handle emergencies and unplanned expenses, and build credit.
A rewards credit card exactly does what its name implies; it rewards a cardholder for making purchases. These rewards can vary by issuer and card type. For example, some rewards come in cashback, discounts on gas station purchases, and even travel miles. Those who regularly use their credit cards can earn rewards, which one can use for things they were already planning to buy and their occasional purchases.