If used judiciously, bank cards provide a superb alternative to handle finance by utilizing the interest-free credit score interval. However, if such playing cards are used extensively to purchase issues method above the earnings limits inflicting delay in paying the bank card payments, customers could fall in a debt entice.
“Credit cards were once considered a luxury, but it’s now a necessity, because credit cards are what help you address your emergencies, needs as well as lifestyle upgradation, especially for young earners who have just started their career and earn a modest income,” mentioned Anil Pinapala, CEO & Founder of Vivifi India Finance.
“Most of us have been brought up fearing credit cards because they are often considered a means to accumulate debt. But not all debt is bad, especially if it takes care of your needs and helps you build your credit profile. Responsible use of credit in fact, is a critical financial learning for efficient management of your personal finances. It inculcates a habit of balancing your income and spending well, thereby enabling access to more credit as you settle in your career,” he added.
Responsible use of bank cards additionally helps the customers in bettering their credit score scores.
“Moreover, a strong credit score is what will get you the best rates and services when you apply for a bank loan. Also, not to forget, discounts, cash-backs, vouchers and other offers can all be availed through credit cards, from time to time,” mentioned Pinapala.
However, for brand new earners, within the absence of current credit score scores, it could be tough to get a bank card with good options. To fill the void, fintech gamers like suppliers of BNPL (purchase now pay later), private line of credit score, and many others chip in.
“Unfortunately, new earners in India are either underserved or unserved by the traditional banking system, as they have no credit history. The tin file consumers have no access to credit cards and this is exactly where players like FlexPay stepped in to provide credit to unbanked consumers. Flexpay’s personal line of credit especially benefits the new to credit or the young earners as it ensures that they have access to credit as and when they require,” mentioned Pinapala.
Talking on the significance of bank cards, Nitin Mathur, CEO, Tavaga Advisory Services mentioned, “Millennials these days eagerly wait to have their own credit cards so that they can spend whenever and however they wish. As soon as one starts working, they become eligible to apply for a credit card. However, a credit card is the root cause of a lot of financial troubles and often make new earners prone to accumulating debt more than they can afford very early in their life. Thus, credit cards should always be used with caution to manage finances and save money.”
Mathur lists the methods wherein bank cards assist to enhance private funds:
Improve Credit Score
Using a bank card is just like taking out loans as credit score bureaus contemplate all bank card transactions when computing your credit score rating. While curiosity is charged on loans, bank cards don’t cost curiosity so long as the total fee is repaid earlier than the due date. Timely reimbursement of all bank card dues improves one’s credit score rating which additional helps to construct credibility for future borrowing.
Card Benefits for saving Money
Many merchandise present advantages tied to bank card funds that you just wouldn’t get hold of in any other case. Discounts, rebates, coupons, and different particular offers are amongst them. One ought to nevertheless be very cautious when availing these advantages as they might be a entice to tackle bank card debt greater than you possibly can afford to pay again.
Credit card EMI’s – a wise solution to pay again
Credit card issuers kind partnerships with producers, service suppliers, and retailers to supply EMIs on their services or products at a lowered or No-cost. Some service provider partnerships even present bank card holders further reductions and cashback after they use the no-cost EMI choice on sure companies and gadgets. While new earners can avail this selection to unfold out the funds, it mustn’t result in an excessive amount of spending on non important gadgets.
“Even though credit cards help you manage your cash and avail attractive deals, it is a debt after all which needs to be repaid back. Any delay in payments will attract a huge penalty and affect your credit score too. It is thus advisable to spend from your savings and use credit card only if it is absolutely necessary and also within your means,” mentioned Mathur.
Source: www.financialexpress.com”