All about Credit Cards: The Pros, Cons, and more

Posted on Friday, December 23rd, 2022 | By IndusInd Bank

What is the first thing that comes to your mind when you hear the word credit card? A liability or a blessing? You may have heard about people using their credit cards irresponsibly and ending up in debt but financial experts call credit cards a smart financial tool that is more beneficial than using a debit card or cash. In fact, credit cards help you a big time in building your creditworthiness for those unforeseen cash-crunch situations. Interesting, right?

Let’s have a look at the benefits that you get to enjoy with a credit card.

Benefits of Credit Card

Welcome Benefits

Who doesn’t like complimentary things and freebies! Most of the credit cards come with exciting welcome gifts that may include brand vouchers, hotel stays, travel insurance cover, airport lounge access, and much more. Moreover, there are possibilities that when you spend a certain amount during a particular time period, the card fee is automatically waived.

Extended Budget

With a credit card, you’re not bound by budget limit. If there’s a sale coming up on your favourite brand and you’re in the month-end, you can always use your credit card to shop without worrying about budget constraints. And in case you end up spending too much, you also get the option to break your spends into convenient EMIs.

Exclusive Offers and Discounts

How do the word cashback and discount sound to you? Amazing, right? There are thousands of online and offline brands that offer exclusive offers to credit card users that they can avail in form of cashback or instant discount. This is one of the greatest enticing benefits that impacts the choice of customers while selecting a credit card.

Reward Points

What makes a credit card stand out from its competitors is the reward point system linked with it. Credit cards provide you with reward points for every transaction you make and these points can later be utilized to claim brand vouchers or you can simply cash out your available points.

Improved Financial Health

Timely repayment of your credit card bills and keeping your credit utilization to a certain limit ultimately helps in boosting your credit score. As your score improves, you are at a greater chance of getting a big-ticket loan should you need it someday. Many users with a low score or with no credit history apply for a credit card just to build/improve their credit score.

Added Security

Paying with a credit card is always a better choice in terms of security as well. Credit cards now come with either a MasterCard chip or a Visa chip that have zero liability coverage for unauthorized transactions. Even if you lose your credit card, you can always report the fraudulent transactions and you won’t be charged if the bank investigators find it true.

As you now know about the benefits of credit cards, let’s take a look at some of the disadvantages too.

Disadvantages of Credit Card

Overspending

One of the biggest responsibilities that comes with a credit card is of using your credit limit responsibly. Credit card users often spend too much beyond their repayment capability and end up in too much debt over time. Mindful and conscious spending is what can help mitigate this overspending risk.

High Interest Charges

In case of late bill payment, credit card providers charge you with high interest charges that eventually make your debt too high over time. Therefore, it is highly advisable that you always clear your dues on time.

Hidden Charges

Surcharges and hidden charges are one of the most annoying things about a credit card. Credit cards are generally fraught with tricky terms & conditions which you might not be aware of while making a payment. It’s the time when you see your credit card bill you realize that some additional charges have been included in your bill. To save yourself from this, always read the associated terms & conditions carefully while applying for a credit card.

Cash Withdrawal Limitation

Unlike a debit card, you cannot use your credit card to withdraw cash freely. Credit cards come with a limited cash withdrawal option and even have a high fee associated with it.

So, with all this information, you must be clear about how a credit card can be your best friend and your enemy.

Looking for the best credit card for you?

IndusInd Bank offers various credit cards that will fit into whatever requirements you have, seamlessly. No worries if you’re a movie buff, travel enthusiast, a regular shopper, or a golf enthusiast, our credit card offerings encompass it all.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.