Credit Card

1- Credit Card: A credit card has become an indispensable part of our lives, with its ease of use and convenient pay-back options. The discounts, offers, and deals that a credit card offers are unmatched by any other financial product and spell a bonanza for the wise user. However, credit cards can become debt traps if not used correctly, or if you spend more than you can repay when the bill comes around.

2. Building a line of credit – Credit cards offer you the chance to build up a line of credit. This is very important as it allows banks to view an active credit history, based on your card repayments and card usage. Banks and financial institutions often look to credit card usage as a way to gauge a potential loan applicant’s creditworthiness, making your credit card important for future loans or rental applications.

3. EMI facility – If you plan on making a large purchase and don’t want to sink your savings into it, you can choose to put it on your credit card as a way to defer payment. In addition to this, you can also choose to pay off your purchase in equated monthly installments, ensuring you aren’t paying a lump sum for it and denting your bank balance. Paying through EMI is cheaper than taking out a personal loan to pay for a purchase, such as a television or an expensive refrigerator.

4. Incentives and offers – Most credit cards come packed with offers and incentives to use your card. These range from cashback to rewards point accumulation each time you swipe your card, which can later be redeemed as air miles or used towards
paying your outstanding card dues. Lenders also offer discounts on purchases made through a credit card, such as on flight tickets, holidays, or large purchases, helping you save.

5. Purchase protection – Credit cards offer additional protection in the form of insurance for card purchases that might be
lost, damaged or stolen. The credit card statement can be used to vouch for the veracity of a claim, if you wish to file one.