The Pros & Cons of Using a Credit Card for Big-Ticket Purchases

Posted on Monday, May 29th, 2023 | By IndusInd Bank

Whether you are planning to buy a new home appliance, furniture, or an high-end electronic device, the first thing that comes to mind is how to pay for it. While there are various payment methods available, one of the popular choice is credit card. Credit cards offer convenience, flexibility, and rewards on transactions you make. In this blog, we will explore the advantages and disadvantages of using a credit card for big expenses, allowing you to make an informed decision and choose the best payment method that suits your needs. Some credit cards even come with specific brand offers to provide you with exclusive discount or cashback, which significantly helps in saving money. However, it’s important to consider the pros and cons before using a credit card for big-ticket purchases.

Pros of Using a Credit Card for Big-Ticket Purchases 

Convenience 

A credit card provides you with immediate access to funds for financing a big purchase. You can complete the transaction in no time and enjoy the item or service immediately. 

Rewards and Cashback 

Many credit cards offer rewards programs where you earn points, miles, or cashback on every purchase. By using a credit card for a big-ticket purchase, you can accumulate significant reward points that can be redeemed for future purchases, travel, or statement credits. This way, you can get more value from your purchase. Moreover, some credit cards even come with exclusive brand offers that significantly help in saving money 

Building Credit History 

Using a credit card responsibly can help in building a strong and positive credit history. Making timely payments and managing your credit utilization can improve your credit score over time, which is beneficial when you need to apply for a loan in the future. 

Financing Offers 

Some credit cards come with fianncing offers like No Cost EMI which eases the burden of payment and lets you enjoy the product or services by simply paying the monthly EMIs without any additional interest. 

Cons of Using a Credit Card for Big-Ticket Purchases 

High-Interest Rates 

One of the major drawbacks of using a credit card for big-ticket purchases is high interest rate levied on outstandings. If you carry a balance on your credit card, you would end up spending a huge amount as interest. Therefore, it is suggested to break you big purchase into EMIs to avoid penalty and interest charges. 

Debt Accumulation 

Using a credit card for big expenses can lead to debt accumulation if not managed responsibly. Overspending or relying heavily on credit card can result in a cycle of carrying balances and accruing interest, which becomes financially burdensome in the long run. 

Impact on Credit Utilization Ratio 

Using a large portion of your credit limit for a big-ticket purchase can increase your credit utilization ratio, and this can potentially negatively impact your credit score. 

Impulse Buying 

The availability of credit card can tempt you to overspend or on unnecessary impulsive temptations that may affect your long-term financial goals. 

Hidden Fees and Charges 

While credit cards provide generous rewards and benefits, they often come with hidden fees and charges. Some of the common charges are joining fee, annual fee, foreign transaction fee, and cash advance fee. However, some leading banks like IndusInd Bank offer lifetime-free credit cards that come with zero joining, zero annual fee, and have no hidden charges. Checkout such options available to you while applying for a new credit card. 

To conclude, using a credit card for big-ticket purchases can offer convenience, immediate access to funds, and potential rewards. However, it’s crucial to consider the potential drawbacks, such as high-interest rates, debt accumulation, and the impact on credit utilization.

Before using a credit card for a big purchase, it’s important to assess your financial strength for repayment and evaluate the terms and conditions of your credit card. Remember, responsible credit card usage, timely payments, and a well-thought-out repayment plan are essential to avoid falling into a debt trap.

Ultimately, the decision to use a credit card for big-ticket purchases should align with your financial goals and be based on careful consideration of the above-mentioned pros and cons. 

If you’re looking for a credit card that encompasses all the benefits and offers reward points to match your lifestyle, check our offerings and you’ll definitely find your ideal pick. IndusInd Bank offers a range of lifetime free credit cards that enable you to enjoy exquisite privileges and help save more with reward points that never expire.   

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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.