A credit card comes with lots of benefits, In India, there are many banks that provide credit cards to individuals and businesses depending on various factors as given in the guidelines of RBI. If you shop frequently, then there are various reasons why you should own a credit card.
By using the credit card, you can avoid standing up in the queues to withdraw the cash and you can avoid waiting for the balance cash change in a grocery shop in cash.
You will see many stores/shops etc have started taking payment through credit cards, even many small Kirana stores have started accepting credit cards as a mode of payment and they have to pay a certain fee to the bank which is providing them the credit card machine.
Some of your friends and family members may be saying that the credit card is nothing but a trap by the banks to charge huge interest from the users of credit cards. The Fact is, a bank offering a credit card does charge interest which is very high, rather it goes up to 45%, whereas the rate of the personal loan remains around 20%.
This high interest rate triggers only when you don’t clear the credit card dues on time. Below are the benefits of using a credit card in India.
A credit card comes with a purchase protection clause to help the cardholder against any loss and theft. Purchase protection or buyer protection doesn’t get much attention when compared with airport lounge access or reward benefits, but this is a very key and important feature of a credit card.
If you order some goods which are not received to you, you can ask the concerned credit card bank to raise a dispute against this transaction and by using this benefit, you can protect yourself from losing money on an item that was lost or not delivered. Once you have reported the theft or loss of your credit card, you are not liable for any transaction afterward.
I had my Citi credit card with me and someone used my card to purchase the Netflix Annual membership, I immediately called Citi customer care and explained the situation. They asked for very minimal information, canceled the existing card, and issued a new one. Don’t know what they did with that transaction, but they never asked me to pay the said amount.
Cashback & Reward
Cashback & Reward are used by banks to lure the prospective buyer to apply for the credit card or they lure the existing customer to bring another customer in the return for referral rewards. At the same time, this can’t be denied that when managed responsibly, the credit card can help you save a good amount of money.
Every bank has its own credit card reward Programme, some banks, give a reward in cashback or some bank gives reward in the form of vouchers. The Bank gives a certain % reward on every transaction you make through the credit card.
The Bank also gives additional reward & Milestone reward, these are given on the basis of minimum spends or making a particular number of transactions in a calendar month or in a calendar year.
Banks give a reward redemption catalog where you can see the options available to redeem the rewards. Which usually contains a voucher from Amazon/Flipkart and many more online partners.
Example in case American Express Membership Reward Card:
- If you make 4 transactions of Rs. 1,500 and above each during the calendar month then you will get 1,000 Bonus Membership Rewards Points.
- You earn additional 1,000 Membership Rewards points simply by spending INR 20,000 or more in a calendar month.
- That means if you spent Rs 20,000 (which includes 4 transactions of Rs. 1,500) in a calendar month through your membership rewards card then you will get 2000 reward points each month, this is apart from the regular reward points. Regular reward points will be 2,40,000 Rs/ 50 Rs= 4800 Points.
- Total Reward for full-year shall be= 28,800 Reward points (12000 Bonus Reward+ 12000 Additional reward+ 4800 Regular reward). In Amex, you can get statement Credit worth Rs. 9,000 on redemption of 24,000 reward points.
- So, In a year by spending just Rs 2.4 Lac, you can get the 9000 Rs off from your credit card balance.
A credit card can give you free access to the various Complimentary memberships of Zomato Gold, Dineout Passport membership, FitPass Pro membership, Paytm First membership, membership of PharmEasy Plus, ZEE5 membership, Money control pro membership, etc. Access to these memberships includes many discounts on food, buy one get one on food and desserts, early access to the restaurants, waiver of food delivery charges. free movies on phone, Extra Cashback @ 5% on medicines and healthcare orders.
Free Credit Card Insurance Cover
Nowadays, almost every credit card comes with a Complementary Insurance cover. Insurance coverages depending on the card which includes but not limited to:
- Air accident death cover
- Non-air accident death cover
- Emergency Overseas hospitalization
There are various insurances that are card specific such as Professional Indemnity Insurance Cover, these types of Insurances are available only to professionals such as CAs. The amount varies depending upon the bank’s terms and conditions. Usually, it remains around ₹ 5 Lakhs.
Please note that the Insurance cover triggers only when the air ticket was booked through a credit card against which your nominee will be claiming the amount. The card should be inactive status, i.e. there should be 3-4 retail transactions through the card in the last 2 months.
Interest Free Credit Period
You get 45 to 50 days (If the transaction has been made on the very next day of statement generation date) an Interest-free credit period to pay your credit card bills. This is the basic feature of every card and when the transaction amount is bigger then this benefit can be of great help.
For example, If you borrow Rs 100,000 from the market for 50 days, then you may have to pay minimum interest @ 18% P.A, which comes out to 2,465 Rs. Even if you don’t need to borrow, you have your earnings with you for the next 50 days and you can make the most of it. Even if you don’t do anything with that amount and the amount is lying in your bank account, then also you will earn interest.
Improved CIBIL Score
Every payment of your credit card bill and loan is reported to CIBIL (Credit Information Bureau India Limited). CIBIL is the RBI authorized credit rating agency which keeps the record of repayment of loan and credit cards.
Based on your track record, CIBIL generates your credit score based on which it is decided whether you are eligible for a credit card. By making on-time payment of your credit card bills you can get your CIBIL score improved.
Many times, we are short of funds and in that case, we might require a personal loan or a home loan, or a vehicle loan as the case may be. If your CIBIL score is good then you can get the loan quickly and at very cheaper rates.
Click here to check the free Cibil Score or you can check your score in the CRED app by utilizing the CRED reward points.
If you are having a Credit card and you are having a decent CIBIL score, then you can have access to the CRED app which provides lots of benefits to its members.
Read CRED Analysis
Forex transactions are those transactions that consist of involvement of Foreign currencies, such as USD, JPY, GBP, etc. When you convert the INR into USD or any other foreign currency, you are being charged the conversion fee.
If you are having a credit card, then you need not carry many foreign currencies (to avoid the conversion cost) with you when you are traveling to a foreign country as you can easily swipe your credit card all over the world.
The transactions made outside India are charged @ 2% P.A + GST but you get the rewards whenever you purchase your credit card. So you need to carry cash with you as you can always use your credit card when you are doing foreign travel.
Free Airport Lounge Access
Airport lounge access is one of the key features of any Credit Card, while, most of the banks provide the benefit of Airport lounge access however they provide it on selected Credit Card.
The Lounge access at the airport has been one of the most utilized benefits by Credit Cardholders in recent times. This can be said that it is the second most attractive feature which a bank can offer to its customers, the first one is the reward/Cashback Programme.
Banks provide this feature free of cost to their credit card customer, otherwise, lounge access would cost you a minimum of Rs 1500+GST.
Fuel Surcharge Waiver
We spent a big amount of our earnings on fuel, most of the cards provide a waiver of fuel surcharges when you pay your fuel bill through a credit card at the fuel station.
Other Benefits of Credit Card
Other benefits of credit cards include exclusive online offers on Flipkart, Amazon, Croma, Big Bazar, Easy Day, Free Movie tickets, etc.
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