In India debit cards are most famous as we Indians love to have control over money and want to live a conservative life within our earning capacity.
There is nothing wrong in living a calculated life. I have huge respect for them. But there are few things a credit card can add value in our day-to-day life. Using credit card is so easy and smart decision if you know how to make full use of it.
Free credit period
Mostly all credit cards in India comes with 50 days free credit period. Which means you can buy today and pay next month.
Real life scenario: By 20th of every month i’ll mostly be broke and credit card will come handy that too when i live in city like Bangalore were even road side shops accept PayTM. I can top-up PayTM digital wallet with my credit card and pay after my salary.
Total protection
Most people believe transacting on debit card is safe, but in reality debit card’s does not come with protection against any unauthorised transactions and the debit card holder need to worry about fraudulent usage of the card. But it’s not the case with most credit cards as they come with insurance program which covers you for a sum up to the credit limit on your Credit Card.
Real life scenario: If i loose my wallet in airport and some one pickup my card and does to any offline store and swipe the card knowing my password for 1,00,000 INR. But I came to know about loosing my card only after a long five hours flight, now first thing i have to do is call up the credit card customer center and ask to block my card. Also inform them that any usage of my card is not authorised by me. Then file a FIR and send the copy to the credit card company. Simple, my new credit card will be issued and I don’t need to worry about the misused transaction. But if it’s the same with debit card, you would have already lost your money and the bank may be helpless.
Emergency needs
It would always be handy to have a credit card as we may have many unplanned expenses and would run out of cash from our saving back account.
Real life scenario: My dad was not feeling well on last week of the month midnight and I did not have any money left out on the savings bank as I had budgeted and spend almost everything except the minimum balance. Though he had medical insurance since it was mid night the only option for him to get admitted was to pay an advance. He used the add-on card of mine and smoothly got admitted into the hospital. Even If i had minimum balance and had used it using the debit card i would have attracted penalty for non maintenance of the minimum balance. It would have been tough to find loan against jewel at mid night or trouble a friend to transfer money during middle of the sleep.
Free Interest from saving bank account
There is a saying A penny saved is a penny earned. So, why not take advantage of earning some interest from your saving account.
Real life scenario: Let’s say on an average as a family we spend 1,00,000 INR on our day-to-day living. I use credit card for my mobile, broadband, petrol, restaurant, shopping and travel booking. I also have add-on cards for my parents and sibling and they also use it for most of the purchases. Three days before the due date i settle the credit card bill. So, my saving bank account has 7% interest. Which means (1,00,000 * 0.07)/12 = 583, and my mobile bill will be around 500 INR, which means I get my phone bill FREE of cost every month. If you had made payments using the debit card your real money from saving back would have been debited and you would have lost the interest. The best part is interest gained from saving bank is tax free till 10,000 INR.
Free airport lounge access
MasterCard Platinum and VISA Signature card comes with free airport lounge access in India. Most cards distributed in India are either MasterCard or VISA card. So, by choosing the wise credit card, we will get atleast 2 airport lounge access free per quarter.
Real life scenario: I’m sure we all travel by Air atleast twice in a year and we will rush to airport atleast an hour before. Most people just sit in that uncomfortable airport gate chair. But if you have right credit card you can enjoy free food, snacks, non-alcoholic drink and mineral water bottle free from the lounges on the airport before boarding the fight. I love travelling and I eat at airport lounge to cut down my one meal spending before getting into the flight. Most flights we catch are at 7 in the morning or after 10 pm and we don’t have time to have our food at home or in regular hotels.
Cash back / reward points
There is always some rewards to make you use the credit cards. It would mostly be reward points and rarely cash back. When you spend on debit card you may not get as good reward points as in credit card.
Real life scenario: In a year as a family we may spend 10L INR, which include all utility bills, petrol, travel, insurance and shopping. Just by using the credit card that i own we get 2% cash back flat. Which means it’s 20,000 INR, so I can gift my mom a diamond as her birthday gift, smart son 😉
Free insurance
Most credit cards come with complimentary Personal Air Accident insurance and emergency overseas hospitalisation cover which may range from 2 lakhs INR to 2 crore.
Real life scenario: Paying for insurance is something a must but I don’t feel happy spending. It’s a protection not an investment. That too if it comes free of cost just for making use of a card, why not? With credit card around to lend you a helping hand, you have very little to worry about. To have peace of mind you just need to reduce your worries.
Improve CIBIL score
Paying the credit card payment fully on time has many advantages. In India all the loans and credit card are linked to PAN number of the user and reported to CIBIL on regular basis.
Real life scenario: If I and my friend went to a bank to get a car loan, the relationship officer first will checks the cibil score online. Since I was using the credit card for very long time and my friend did not own a credit card or any other loan we had different cibil score. As I had made payments on time the bank has relationship and i’m a loyal customer as per the records. My friend who also is loyal by heard but did not have loan or credit card payment before and was in cloud. It will be a cake walk for me showing the previous track record to get loan approval and also room for interest negotiation. My friend may not get that privilege.
Record transactions
Credit card would allow us to manage the spending by looking at the statement every month. It also helps to have control over the spending by setting the max spending amount for the add-on cards. It makes our life easy to have all spending at credit card, cash withdrawal using debit card from ATMs.
Real life scenario: I use debit card only to withdraw cash once every weekend. I use credit card for all the spending. So, by end of the month i know what was my budget and where did I make the extra spending and also my family spending. Managing cash is a mess and lose interest if I take it out from the saving bank.
Add-on cards
Little Drops of Water Make the Mighty Ocean. Every little spending of the family members can help you get that extra cash back. Extend your care by giving add-on card to your family members in case of any unexpected needs.
Real life scenario: My dad and sister have a add-on card which they use on day-to-day basis so i don’t need to worry about having money in their saving bank account which yields less interest which is 3.5%.
Obviously there are many other card specific advantages which is for more advanced card users. What is that stopping you from using the credit card? Share it on the comment section.
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