Credit cards are a form of credit facility that has revolutionized the way we make purchases. Instead of using a debit card or UPI, we can use a credit card to “buy now and pay later.”
How do Credit Cards work?
At its core, a credit card is a financial instrument that allows you to borrow money from a bank or credit card company to make purchases. When you use your credit card, you’re essentially taking out a short-term loan that you are required to pay back on time. Many credit cards offer reward programs that can help you earn points, cashbacks, or provide other incentives for your purchases.
However, it’s important to use your credit card responsibly to avoid getting into debt or damaging your credit score. In this blog, we’ll explore some tips and strategies for you to use your credit card wisely and make the most of its benefits.
Short and Long-Term Benefits of using a Credit Card
Using a credit card for everyday purchases can offer several short-term benefits, including convenience and ease-of-use, rewards, and cashback programs; building your credit score, and travel benefits.
- Convenience and ease-of-use: One of the primary advantages of using credit cards for everyday purchases is the convenience and ease-of-use they provide. Simply swipe or tap your card, and you’re done! This makes shopping faster and more efficient, hassle-free, and saves your time.
- Rewards and cashback programs: Many credit cards offer rewards and cashback programs that can provide immediate benefits. These programs offer incentives for using your card, such as points that can be redeemed for merchandise, travel, or even cash back.
- Building credit score: Another short-term benefit of using credit cards is that it can help you build your credit score. By making regular, on-time payments, you demonstrate your ability to manage credit responsibly, which can help improve your credit score over time. A good credit score can open up more opportunities for loans, credit, and even employment.
- Travel benefits: If you’re a frequent traveller, using a credit card can offer additional benefits such as travel rewards and perks. Many credit cards offer travel rewards programs that can earn you points for flights, hotels, and other travel expenses. Some cards also offer travel insurance, rental car insurance, and other benefits that can make your travel experience more enjoyable and worry-free.
- Priority access to exclusive events, discounts, and lounge access: Many credit cards offer exclusive benefits such as priority access to events, discounts, and lounge access at airports, hotels, and other locations. These perks can add value to your life and make your experiences memorable and joyful.
In addition to the short-term benefits of using credit cards for everyday purchases, there are several long-term benefits that can have a significant impact on your financial life.
- Building credit history: One of the most significant long-term benefits of using a credit card is that it can help you build your credit history. Credit history is a record of your credit usage, including your payment history, balances, and other factors. By using your credit card responsibly, you can build a positive credit history that can help you qualify for loans, credit, and other financial products in the future.
- Potential for lower interest rates on loans: A good credit score and positive credit history can also help you qualify for lower interest rates on loans. Whether you’re looking to buy a car, a home, or another big-ticket item, having a good credit score can help you save money on different fees.
- Access to credit during emergencies: Credit Cards can provide you with access to credit during emergencies. If you experience unexpected expenses or an income disruption, having a credit card with available balance can help you cover these costs and avoid financial hardship.
Tips to use your Credit Card Responsibly
Here are some tips to help you use your credit cards more mindfully:
- Develop a budget: The first step to using your credit cards responsibly is to develop a budget. This means taking a close look at your income and expenses, and creating a plan for how much you can afford to spend each month. Stick to your budget and avoid overspending on your credit cards.
- Pay off credit card debt on time: One of the most important rules of using credit cards mindfully is to pay off your credit card debt on time, every month. This will help you avoid late payment charges and high interest rates, which in turn will help you build a positive credit history.
- Avoid cash advances: Cash advances on your credit cards can be tempting, but they come with high fees and interest rates. Avoid using your credit card for cash advances unless it’s absolutely necessary.
- Monitor your credit score: Your credit score is a crucial factor in determining your financial health and your ability to qualify for loans and other financial products. Monitor your credit score regularly and take steps to improve it, if necessary.
- Choose the right card: Not all credit cards come with the same benefits. Choose a credit card that fits your lifestyle and spending habits, and offers rewards and benefits that are meaningful to you.
- Read the terms and conditions beforehand: Before you sign up for a credit card, make sure you read the terms and conditions carefully. Understand the fees, interest rates, and other important details so that you can make an informed decision.
How to select the right credit card?
Selecting the right credit card can be a daunting task with so many options available. The best credit card for you will depend on your individual needs and lifestyle. Fortunately, RBL Bank Credit Cards offer a wide range of cards tailored to different customer requirements.
For movie enthusiasts, the Cookies Credit Card is a perfect fit; offering benefits like free movie tickets and discounts on food and beverages at partner cinemas. If you’re looking for premium lifestyle benefits like exclusive airport lounge access and concierge services, the Platinum Maxima Plus Card would be a great choice. For those with a passion for travel, the World Safari Credit Card provides travel-related benefits such as air miles, complimentary lounge access, and discounts on hotel bookings. If you are a frequent shopper, you can consider the Icon Credit Card which offers rewards and cashback on grocery and fuel purchases.
With RBL Bank’s Credit Cards, you’re sure to find the perfect card which suits your lifestyle and maximizes your rewards.