When used properly, credit cards are immensely beneficial. These are short-term facilities albeit without any additional cost when bills are paid in full on time. Although cards are very convenient, there are several risks.
When you do not use these in a proper manner, there is a risk of having huge outstanding amounts payable. The finance charges on such pending payments are expensive, which may lead to a debt trap.
However, there are several benefits of a credit card. Here are five such advantages.
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Discounts
Often card providers tie-up with stores to offer special deals and discounts to their cardholders. Some of these include discounts that exceed store deals, interest-free installments, and others. Several cards may allow you to travel using Equated Monthly Installment (EMI) packages. If you fly frequently, a card may enable you to enjoy discounts on your flight tickets.
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Insurance
For events that are listed, cards offer insurance coverage. The biggest advantage is that purchases made using your card are covered for a certain time from the date of purchase. Additional benefits like lost baggage insurance and accidental coverage are available.
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Personal loans
You may suddenly face an emergency where you require immediate funds. Although personal loans are sanctioned quickly, you need to meet certain eligibility criteria. Additionally, you need to submit the required documents. Most cards offer cash-on-call facilities that may provide you with the required funds. Some cards may offer personal loans provided at bank interest rates. Therefore, your card may be used to meet emergency fund requirements.
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Bill payments
Given the hectic work schedule, it is possible that you may not have time to complete the regular tasks. One of these several tasks includes bill payments for utilities, phone, and cards. All these bill payments may easily be made using your card. When you set up an automatic facility, you do not have to remember to make the payment before its due date. This ensures you never miss the date and pay unnecessary late fees.
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Reward points
Most cards allow you to accumulate reward points on every purchase. These points may be used to avail of several goodies such as retail vouchers and other products and services. The reward points vary from one financial institution to another and it is recommended you check these before availing of the same.
Most financial institutions offer cards to make life easier and convenient. You must evaluate the various options. It is important you read the fine print to understand the terms and conditions. You must also understand the various offers and benefits available on the card. Taking the time to research and evaluate different options is beneficial to help you make an informed decision.
