Banks are offering credit cards widely to employees and business associates. But is it wisely take one and use them? This is the first question that strikes most of the first time users. Read through to find a conclusive answer.
An efficient use of credit card helps manage cash flow. However, ensure to get an idea about the interest rate and charges before using them. Be fully aware of the pros and cons before using the credit cards. Here is how you can use the credit cards to the best of your advantage.
- Keep a track on your expenses: Use credit cards to conveniently manage your cash flows. Regular payments through credit cards is a good way to track expenses.
- EMI/ Large purchase options: Credit cards come in handy to make large purchases when funds are not immediately available. Many times, credit cards also offer a facility to convert purchases into EMI payments, where you need not have to pay for credit charges when you make regular EMI payments.
- Lower fraud risks or errors: Making payments via debit cards involve higher risks, additionally, the possibility of errors is high. In the case of credit card, you can appeal against, you can appeal against the error, if any, and will have to time to rectify without paying.
- Emergencies: One of the main advantages of credit card is to pay for emergency expenses. However, one has to be aware of the payments of an over-limit fee, which is more than the usual interest rate on cash advances on the credit card.
- Build good credit history: Credit card helps big-time in building a good credit history. A good score is always helpful to access loans anytime.
In conclusion, it is important to use credit cards wisely and responsibly. A credit card can add value to the ability to manage finances, efficiently. One has to be aware of the indiscriminate credit card usage and the possibility of getting into debt traps.