Do you prefer to regularly pay with cash or credit cards?

Credit Card and its uses in our daily life

Let us discuss the advantages of the use of Credit Card in our daily life:

A credit card is a type of credit facility, provided by banks, that allow customers to borrow funds within a pre-approved credit limit. It enables customers to make purchase transactions on goods and services.

Depending on our needs, a credit card comes with a host of features and benefits to save money while making transactions. Here are the top benefits to help us to know more about credit cards:

Hassle-free shopping experience

The benefit of having the best credit card is that it has made shopping easier and convenient. You no longer need to visit malls or stores to make purchases. With your credit card, you can make big purchases from the comfort of your home.

No need to carry cash

Credit cards are the best alternative to cash, as it eliminates the need for carrying cash. Credit cards are accepted almost anywhere you go.

Rewards, cashback, and offers

The best credit card comes with rewards and cashback that fits your needs and requirements. Depending on your credit card issuer, your credit card comes with a host of special discounts, cashback, or rewards points for purchases made through it. Also, there are credit cards that offer special discounts on shopping, travel tickets, and accommodation.

Easy cash withdrawal

Another benefit of having the best credit card is that it allows you to withdraw cash whenever the need arises. However, it is worth noting that using your credit card to withdraw cash follows a small fee that you will have to bear while repaying your outstanding amount.

Widely accepted

The best thing about a credit card is that it is accepted worldwide, as it is the most common mode of payment across the world. However, using your credit card abroad can cost you high foreign transaction fees and high foreign exchange rates.

Meet emergencies

If you are wondering what is a credit card, it is a type of loan that offers to cover the cost of emergencies for you and your family. For instance, you can use your credit card to pay your medical bills. Keep in mind that you will have to make on-time payments to avoid hefty interest charges and higher APR%.

Improves credit score

Some people also use credit cards to improve their credit scores. Your credit score is a three-digit number that indicates whether or not you are a creditworthy borrower. It is considered as one of the crucial parameters to determine a borrower’s eligibility. When you repay your credit card bills on time, it leaves a positive impact on your credit score, allowing you to secure loans in the future.

Is It Advisable to Use a Credit Card for Regular Purchases?

You can use a credit card for everyday purchases to build credit and to earn rewards for the spending you already do. But remember that you should only use a credit card for purchases you can afford to pay back and make on-time payments to avoid damaging your credit.

Please share your experiences and advice to new credit card users.

A credit card for regular purchases can be advisable, provided you manage your credit responsibly. Here are some of the main advantages and potential drawbacks to consider:

Advantages:

1. Building Credit History: Regular use and timely payments can help build and improve your credit score.

2. Rewards and Cashback: Many credit cards offer rewards, points, or cashback on purchases, which can lead to significant savings or benefits over time.

3. Fraud Protection: Credit cards offer better protection against fraud than debit cards. If your card is used fraudulently, you're typically not held liable for unauthorized charges.

4. Purchase Protection: Many credit cards offer purchase protection, extended warranties, and return protection, which can benefit high-value purchases.

5. Convenience: Credit cards are widely accepted and more convenient than cash.

6. Expense Tracking: Monthly statements can help you track and manage your spending, making budgeting easier.

Potential Drawbacks:

1. Interest and Fees: If you don't pay off your balance in full each month, you'll incur interest charges. Credit card interest rates can be high, leading to significant debt over time.

2. Overspending: The convenience of credit cards can sometimes lead to overspending and financial strain.

3. Debt Accumulation: Relying on credit cards for regular expenses without the ability to pay off the balance can lead to mounting debt.

4. Impact on Credit Score: Missed payments or high credit utilization can negatively affect your credit score.

Tips for Responsible Use:

• Pay Off the Balance in Full: To avoid interest charges, aim to pay off your credit card balance in full each month.

• Track Your Spending: Regularly monitor your spending and ensure it aligns with your budget.

• Set Up Alerts: Use alerts to remind you of upcoming due dates and payment amounts.

• Use Rewards Wisely: Take advantage of rewards programs, but don't overspend to earn points.

• Keep Utilization Low: Keep your credit utilization ratio below 30% of your credit limit.

In summary, using a credit card for regular purchases can be beneficial if you manage it well and avoid accruing debt. The key is to use it responsibly, pay off the balance each month, and take advantage of the benefits without overspending.