If you are wondering what the benefit of a credit card is in terms of saving money, there are quite a few. From cashback and discounts to interest-free periods, credit cards can help you cut costs if used wisely.
Many people are turning to digital payments and using their cards for everyday spending. Thus, credit cards have become a regular part of how we manage money today. Here are some of their money-saving benefits in detail.
The advantages of a credit card include rewards that you receive every time you spend on eligible transactions.
Lots of credit cards give you cashback on your normal spending. For example, some cards will give you a percentage back when you pay for groceries or fuel or when you shop online or dine at a restaurant.
Most cards allow you to earn points for eligible purchases. You can collect these points and use them later for discounts, gift vouchers, or even pay off your card bill.
Certain cards have higher rewards for spending in particular categories like travel, entertainment, or online shopping.
Numerous credit cards reward you with points just to sign up or use your card to spend a certain minimum on purchases within the first few days.
You can redeem your reward points or cashback for vouchers, merchandise, or flight and hotel bookings.
One of the lesser-known advantages of a credit card is the interest-free period. It is the time between your purchase date and your payment due date, usually ranging from 30 to 50 days.
The interest-free period is a fixed number of days during which no interest applies to your purchases. To keep enjoying this feature, it is necessary to pay your entire credit card bill on or before the due date.
You can plan your bigger spends around your billing cycle. Buying something right after a new cycle starts gives you the longest grace period to repay without interest.
Several credit cards also provide access to a broad range of partner discounts and special offers.
Occasionally, around festivals and events, credit card companies offer time-limited cashback, discounts, and bonus reward points offers. These offers typically provide the most value for larger purchases like electronics and holiday bookings.
A lot of cards come with promotional offers from dining or lifestyle partners. These perks help you reduce the cost of enjoying leisure activities.
Travel credit cards offer lots of travel perks, including flight and accommodation discounts, accelerated rewards points, lounge access, and travel insurance.
Using a credit card responsibly helps shape your financial future.
Paying your credit card bills on time and using only a portion of your credit limit are key to building a strong credit profile. Over time, these steps account for a healthier credit score.
Financial institutions often reward financially disciplined borrowers with lower interest rates on loans. In the long run, you pay significantly less interest with better loan terms.
Big purchases don't need to be overwhelming. Many credit cards offer the ability to convert large purchases into manageable monthly payments, with no or low interest. This will help you to purchase big-ticket products without impacting your savings.
You can choose the repayment period that works for you, generally between 3 and 24 months.
Many ‘no cost EMI’ options mean the retailer covers the interest or includes it in the product price. You pay only for the item, not extra interest, making it cheaper than personal loans.
Rather than dipping into savings or taking a personal loan, EMI conversion through a credit card keeps your cash flow intact. It gives you short-term flexibility.
Most credit card apps let you convert purchases to EMIs instantly. Just select the transaction, choose your plan, and confirm in a few taps.
From converting purchases to EMIs to unlocking cashback and rewards, the advantages of a credit card
go beyond convenience. But the key lies in smart usage. Paying your bills in full and avoiding unnecessary fees can help you stay debt-free while making the most of your card.
How can I maximise the rewards on my credit card?
To maximise your credit card rewards:
What is the interest-free credit period, and how can I benefit from it?
The interest-free credit period is typically 30 to 50 days between your purchase date and payment due date. To benefit from it, understand your billing cycle and plan large purchases accordingly.
How does using a credit card help in building a good credit score?
Using a credit card responsibly can improve your credit score by:
What is EMI conversion, and how can it save me money?
EMI conversion allows you to split large bills into manageable monthly instalments. You don’t need to repay the total amount in the next bill, but over a flexible timeline. This prevents you from leaving an unpaid balance and accumulating interest on it.
