Financial independence and Credit Cards. Wondering what the connection is? Read on to find out.
A Credit Card is a financial instrument that is considered as a threat to one’s financial stability. Most often abused and demonised, it is a common belief that Credit Cards can interfere with financial independence. But is it really true?
Are Credit Cards really a potential threat to your personal financial stability? Or is it your best bet to achieving financial independence? Let’s find out.
Additional Reading: Myths About Credit Cards That Won’t Go Away
Credit Card – A Potential Financial Risk?
Well, we can’t disagree with the fact that a Credit Card can be both an ally and a foe. However, it plays the role of the latter only if you do not use your card responsibly. A Credit Card can be a potential threat to your finances only if you use it recklessly. And by reckless usage, we mean maxing your card out, paying only the minimum due, not paying your dues at all, and not making payments on time.
If you steer clear from reckless usage, then a Credit Card is the best financial instrument to help you be financially independent. Don’t believe us? Allow us to justify ourselves.
Good Credit History
Creditworthiness is the key to accomplishing anything and everything financial. So, are you creditworthy? If you’ve been credit active, have a clean credit history and a good credit score, then you’re likely to be creditworthy. And a Credit Card can help you with the three above-mentioned factors.
A Credit Card makes you credit active and can help you build a good Credit Score. The latter depends on how you use your card though. Use it wisely – pay your bills on time, don’t exhaust your limit, avoid missing payments, etc. This will help you achieve a clean credit record, thereby, increasing your Credit Score. This, in turn, will gradually build your creditworthiness and buying power.
A clean credit history and excellent Credit Score means that lenders will trust you, thus, providing you with easy access to financial products in the future.
Check your Experian Credit Score for FREE
Purchasing Power
An advantage of being financially independent is having enough and more cash at your disposal. It gives you the power to make purchases as and when you want, without having to think twice. Did you know that a Credit Card gives you immense purchasing power?
Appease your lender by using your Credit Card sensibly and they’ll reward you with higher credit limits every now and then. And as your credit limit increases, so does your purchasing power. Club this with the convenience of EMI payments and you can finance just about anything.
Savings – Cashback, Reward Points, Air Miles
A Credit Card doesn’t just give you purchasing power, it also helps you make the most of all your purchases. How, you ask? Paying with your Credit Card for your purchases – be it everyday items or big-ticket purchases – can fetch you discounts, cashbacks, reward points or air miles. You can redeem accumulated reward points for gifts, cash back or statement credit. Air miles can fetch you free air tickets or hotel accommodation, or discounts on air tickets and hotels.
Tip: Choose a Credit Card based on your lifestyle to maximise savings. If you travel a lot, it’s best that you get a Travel Credit Card. Shopaholics can opt for a cashback or rewards Credit Card.
It’s Your Financial Buffer
Desperate times? Emergency? A Credit Card can be your saviour.
Manish Verma, a 28-year old software professional based in Bangalore, says, “When I started working four years ago, it was very difficult for me to manage my monthly expenses. My salary was pretty low and I used to be dead broke by the third week of the month. Thankfully, I opted for a Credit Card while opening my salary account. Although my credit limit wasn’t much, it helped me cater to my month-end expenses without having to depend on my parents or friends.”
Additional Reading: 10 Credit Card Commandments You Ought To Follow
With a Credit Card, you can also easily track your monthly expenditure and keep a check on it. In short, a Credit Card gives you extensive control over your finances, paving the way towards financial independence. Start your journey towards financial independence by getting a Credit Card today.