As per the latest data released by the Reserve Bank of India, the total number of credit cards outstanding at the end of July was more than 5.7 crore. At the same time, the total number of transactions through credit cards at PoS machines was more than 13 crore. This data is suggestive that more individuals are gradually opting for credit cards to meet their daily expenditures.
It can be attributed to factors like increasing awareness regarding the working of credit cards and less stringent eligibility parameters offered by credit card providers. Nonetheless, knowing more about the perks and credit card benefits will enable one to make a more informed decision before continuing to apply for a credit card.
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1. Helps in Building Credit History
One of the most important benefits that one must know before applying for a credit card is that one can use it to build a healthy credit profile. Consequently, one must make sure to repay the due amount at the end of each month by the due date, which will leave a positive impact on the credit score.
Cardholders should also try to limit their credit utilisation ratio to 30% to improve their credit score further as such a ratio represents limited dependence on credit. Maintaining a healthy credit score will enable them to avail advances from lending institutions in the future easily.
However, individuals with a low credit score or no prior credit history should consider availing cards such as secured credit cards or student credit cards. These types of cards are designed to aid users in building their credit profile from scratch.
2. Attractive Reward Programs
Credit card issuers offer reward programs on credit cards to enhance user experience, which is one of its most attractive perks. Benefits like accelerated reward points are also among the reasons why credit cards are better than debit cards.
With these programs, users can avail rewards points on every transaction with their card, both online and offline. These reward points can be redeemed to avail cashbacks, discounts, and vouchers from partner merchants and stores. Users can also benefit from standalone offers like discounts and cashbacks when transacting with select network stores and brands.
However, since all credit cards come with reward programs, individuals must look for the rate at which such points can be earned before they apply for a credit card. For instance, some credit cards offer 2-3 reward points for every Rs.100 transacted, whereas others offer the same number of points for every Rs.150 spent.
Apart from that, some credit cards also offer reward points as welcome bonuses and on reaching specific spending milestones.
3. Secure Transactions, Both Digital and Otherwise
In today’s time, increased financial transactions made with cards have also led to a rise in fraudulent activities such as identity theft, unauthorised payments, etc. Consequently, users should take steps to mitigate such threats.
One of the ways to protect your credit card from being hacked is opting for one that offers enhanced protection against fraudulent activities, both online and offline. For instance, some cards provide zero-fraud liability cover and in-hand security for added protection with every transaction made.
4. Conversion of Big-Ticket Purchases to EMI
Some credit cards also offer benefits such as conversion of the outstanding amount on the credit card into affordable monthly instalments. This feature allows cardholders to purchase big-ticket items with their card and repay the amount over time without straining their budget.
5. Emergency fund via personal loans
Individuals can also meet their emergency funding requirements with their credit card by availing a personal loan against the available credit limit. With select cards, individuals also avail a period during which they are not liable to pay any interest for up to 90 days.
Additionally, some issuers also allow individuals to withdraw cash from an ATM in case of an emergency without charging any interest on the amount for up to 50 days. In both cases, however, cardholders need to pay a nominal amount as a flat transaction fee.
One should also opt for a credit card that fits his/her spending requirements and lifestyle needs to make the most of the benefits offered. Accordingly, financial institutions also offer an array of credit cards to suit various lifestyle requirements. These include the following –
Lifestyle credit cards
These cards facilitate users to meet various lifestyle related financial needs such as shopping, travel, entertainment, and the likes. Moreover, the reward points earned on using these types of card remain accelerated for such transactions. They can be redeemed to avail lucrative discounts on the purchase of a lifestyle product or service from a partner merchant and help multiply savings.
Travel credit cards
These cards usually offer an array of exclusive travel benefits to the cardholders such as access to VIP lounges at airports in both national and international destinations, free travel miles, reward points and discounts with every travel ticket or hotel booking, and so on.
Credit cards for women
Financial Institutions also offer tailor-made cards for women, which carry several features and benefits. Some of them include bonus reward points on conducting transactions up to a particular value every month, accelerated reward points on lifestyle-related purchases, VIP lounge access, and so on.
Business/corporate cards
Business owners and companies can also apply for a customised credit card designed to meet all work-related expenses. For instance, these cards can be used to purchase raw materials for business, improve cash flow, and so on, and come with a high credit limit.
Easy Steps to Apply for a Credit Card Online
An online application facility is one of the many perks extended by card issuers so that individuals can compare the features and select a card from the convenience of their home. Given below are the steps to apply for a credit card online –
- After choosing a card from the credit card section on the financial institution’s official website, check the eligibility criteria and confirm whether you fulfil them.
- Next, click on the online application form and enter all the required details.
- Submit the forms along with the essential documents to complete the application procedure.
One can also consider applying for credit cards like SuperCard that offer instant approval to post an online application.
The issuer of the card also brings pre-approved offers that simplify application and cut down unnecessary hassles. Besides credit cards, these offers can be availed on other financial products too, such as personal loans and business loans. To check the pre-approved offer, one only has to enter necessary details like name and contact number.
Nevertheless, before you apply for a credit card, make sure to assess your spending habits first to make the most of these perks and benefits. You should also check the interest rates and associated fees levied by the card issuer before proceeding to apply.
