Credit Cards have been around for a while now, but thanks to demonetisation, their usage has increased drastically. Post demonetisation, cards have replaced cash and their dependency has increased and led it to become more of a necessity. But with its rampant usage, Credit Cards are often the subject of discussion on whether they are a boon or bane. Let’s face it, life was simple without them – we all agree. But hasn’t it gotten simpler with them?
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We could probably spend all day talking about the pros and cons of having and using a Credit Card. Sure Credit Cards come with loads of benefits for users, at the same time they sure pose a grave risk when misused. Let’s find out whether Credit Cards are indeed a boon or bane to mankind.
To arrive at a consensus, we must go through the uses of a Credit Card and thereby determine whether or not it’s a boon or bane for its users.
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Uses Of A Credit Card
This modern marvel can work either way, depending on the person using it. Don’t let your relationship with plastic money go sour. Here are some of its top uses. Take a look:
Managing Day To Day Expenses
Using your Credit Card for day-to-day expenses like buying groceries, paying utility bills or dining is quite common. While this may not always be bad, sometimes you are likely to overspend in the bargain. And if you’re wondering how this is possible, then let’s give you an example.
Suppose you’re used to swiping your card to buy groceries, you could very well go overboard while shopping for the same. Often while you’re at the supermarket, you tend to buy things you don’t need. If you’re someone who loves experimenting with new products or are amazed by something that reads ‘sale’ next to it, then you sure are going to be picking a dozen of those items even if you don’t need them. This way you’ll end up overspending. However, the remedy to this problem is to draw up a monthly budget and stick to it. Beyond that – use cash.
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Battling Those Tough Months
When you’re out of cash, your Credit Card turns into that friend you can rely on. Often when you’ve overshot your expenditure for a particular month and don’t have enough cash in your bank account to pay, your next instinct is to turn towards your Credit Card. Credit Cards come in handy during such scenarios, because with your card, you can buy now and literally pay later. Plus, they come with an interest-free credit period of 20 – 50 days. This grace period gives you a buffer to arrange and pay for the things you couldn’t have got when you ran out of cash.
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However, on the flip side, if you do not pay your bills within the due date, you will be charged a late-payment fee, a high interest and also taxes on these charges. Moreover, non-payment on your outstanding due will also affect your Credit Score. And this vicious cycle only brings bad news, because your Credit Score will affect your credibility should you need a loan in the future.
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Earning Reward Points
The main reason why Credit Cards are lucrative is because of all the ‘rewards’ they offer. While there are plenty benefits and perks that come with a Credit Card, reward points are like icing on the cake. You see, for every spend you receive a ‘point’ that you can spend again! What else would you need, right?
While there are multiple benefits associated with reward points, sometimes the very process of accruing a reward point can be damaging. Think about it. To earn a point you need to spend a certain amount. So, your greed could get the better of you and chances are that you’ll end up overspending in the bargain. Going on a shopping spree just to gather points – that would be a special kind of crazy, wouldn’t it? And before you know it, you’ll have maxed out on your Credit Card leading to that vicious circle of Credit Card debt yet again.
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Shopping online is in… so is that virtual burglar! We’ve heard tons of stories on Credit Card fraud that have happened with people who use their information on unsecured websites to carry out an online transaction. Yes, shopping online is easy, convenient, and less time-consuming with a Credit Card in hand, but, it also is very risky when not done right.
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Moreover, these days it’s very easy to retrieve someone’s card information over a dubious phone call and then misuse it! So, saving your card information on unsecured sites, sharing your card details with strangers and writing down your codes will lead to disaster. Practice safety while using your card is one thing, but knowing what can go wrong with it and being aware is what you need to do.
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Avail Maximum Discount And Cash Back
With a co-branded Credit Card, you can avail huge discounts on brands that have partnered with your bank. Besides, you’ll also be entitled to cash back during certain time periods or festivals. And this is great, who wouldn’t want to make the most out of their Credit Card, huh? But, this also comes with the risk of over spending and buying things you don’t need.
Let’s say that your Credit Card is running a 25% cash back offer on a selected mobile phone. The offer may be tempting considering how little you’ll have to pay, plus with an EMI option on your Credit Card for that mobile phone, it may not seem too much. But on the other hand, you already have a phone that functions and may not necessarily need it. So, what do you do? You buy it anyway because the offer is so irresistible. Now what have you done? You’ve bought something you don’t need, paid for something you can’t afford and now you’re liable to repay the outstanding amount! You’re caught in the web of debt and there’s no escaping it.
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Just like every good thing that comes with a disclaimer attached to it, Credit Cards too are great until you know how to get the best out of them. It’s easy to fall into the debt trap with a Credit Card but using precaution is what you need to do. When used correctly, Credit Cards are surely a boon to mankind. They are an effective, quick, and convenient alternative to cash that make for a pleasant experience while transacting.
At the same time, if not used wisely they are a recipe for disaster.
Thus, we conclude that deciding whether Credit Cards are a boon or bane lies in its usage. If you haven’t already used a Credit Card, we suggest you to take a look at the infinite options we have for you.