10 Benefits of Credit Cards That You Must Know

Credit cards offer a multitude of advantages that you might not be aware of. Apart from providing instant funds and purchasing power, these cards come with exclusive benefits that can enhance your experience.

Once upon a time, credit cards were considered a luxury reserved for the affluent and famous individuals. Obtaining one was a privilege not accessible to everyone. Only well-established businesses or top executives could apply for them.

However, in today’s India, almost anyone from the middle-income group can easily apply for and obtain a credit card from their bank. All you need is a good credit score, although some banks may require you to transfer your salary to the issuing bank. Others have more flexible criteria, such as qualifying income, a Permanent Account Number (PAN), and verifiable address proof.

The credit card industry in India has become highly competitive, making it challenging for banks to attract new applicants. As a result, they send enticing emails with excellent offers to potential credit card customers. Some banks even provide outstanding benefits to entice and retain credit card holders.

Whether you already possess a credit card or plan to apply for one, it’s important to be aware of the top 10 benefits of credit cards that can offer. Depending on the type of credit card you choose, here are some excellent benefits you can enjoy.

Top 10 Benefits of Credit Cards

Here I will discuss the topmost benefits of credit cards. As I said earlier, benefits may vary according to issuer and level of membership.

1. Peace of Mind

One of the most significant advantages of owning a credit card is the unparalleled peace of mind it provides.

Having a credit card means you always have the means to make purchases, even when you don’t have cash readily available. This allows you to pay for services and make emergency purchases conveniently.

Credit card payments are widely accepted by hospitals, pharmacies, and other emergency service providers, ensuring that unexpected expenses not covered by insurance can be easily managed.

Gone are the days of scrambling to borrow money from family and friends to cover unforeseen costs. The peace of mind that comes with having a credit card more than compensates for any annual membership fees associated with it.

To fully enjoy this benefit, it is essential to use your credit card responsibly, maintaining a prudent balance and using it only when necessary.

2. Benefits for Online Shopping

Credit cards offer a host of benefits when it comes to online shopping, making your experience more rewarding.

Leading online retailers like Amazon and Flipkart often provide exclusive and instant discounts if you make a purchase using a credit card from select banks. These discounts can range from two to ten percent of the total purchase value. What’s more, these discounts are available throughout the year and are not restricted to specific sales or festive seasons.

One remarkable advantage of credit cards for online shopping is the option to make payments in installments. There may be instances when you don’t have enough balance on your credit card to buy something expensive outright. However, with a credit card, you can choose to pay for your purchases over an extended period of up to 24 months in some cases.

It’s important to note that opting for Equated Monthly Installments (EMIs) may incur a slightly higher cost due to something called the Annual Percentage Rate (APR). This functions similarly to bank interest on loans. Nonetheless, this convenient feature allows you to acquire the latest items when you need them the most, without straining your immediate finances.

Also Read: 10 Best Clothing Brands in India for Men, Women and Kids

3. Airport Lounge Access

Many credit cards now offer the added perk of complimentary access to Business and First class lounges while you wait for your flight.

This means you can relax in the comfort of an airline lounge instead of the crowded waiting areas at the airport.

Thanks to global agreements between Visa International, MasterCard, and various airports and airlines, this facility is available worldwide. As a result, even if you’re traveling in Economy class, you can enjoy free lounge access. Typically, this privilege extends to your spouse and children below the age of 12 as well.

Being in a Business or First class airport lounge comes with several benefits. You can indulge in complimentary beverages, including alcoholic drinks where permitted, as well as snacks and entertainment. Additionally, at select airports, you may also receive priority boarding along with Business and First class passengers.

This exclusive lounge access is a valuable perk that adds a touch of luxury and comfort to your travel experience, regardless of your class of travel.

4. Loyalty Points

One of the most overlooked yet excellent benefits of credit cards is the opportunity to earn loyalty points. Almost every credit card provides free membership to a loyalty program.

When you make purchases with your credit card, you accumulate a certain number of points. Furthermore, you can earn additional loyalty points for spending at partner merchants affiliated with the credit card issuer.

The loyalty points you accumulate by simply using your credit card offer various advantages. You can exchange them for valuable rewards, such as shopping vouchers or high-end gifts. Alternatively, you can redeem them for cash discounts when making purchases.

It’s important to note that loyalty points typically have an expiration date. If you fail to use them before they expire, these points go to waste.

Remember that the credit card issuer bears the cost of providing these loyalty points. Therefore, not utilizing them means you’re essentially wasting your money as well as the issuer’s.

By taking advantage of loyalty programs and redeeming your accumulated points wisely, you can enjoy additional benefits and make the most out of your credit card usage.

5. Free Insurance Cover

One valuable feature offered by nearly every credit card nowadays is the provision of complimentary insurance. Credit card issuers often arrange group insurance coverage for their card members.

Depending on the type of credit card and the issuer, you can enjoy insurance coverage for accidental injury or death, loss of baggage during travel, and in some cases, even life insurance.

Certain credit cards also provide purchase protection, meaning the items you purchase using the card are insured against damage and theft.

If you already hold a credit card or plan to obtain one, it’s important to inquire about any complimentary insurance benefits. Consider nominating a family member and informing them about this advantage of your credit card.

In the unfortunate event of an accident, your family members can receive vital financial assistance from the credit card issuer.

Taking advantage of the free insurance cover offered by your credit card can provide an added layer of protection and support for you and your loved ones.

6. Cash Advances

Having a credit card eliminates the worry of always having cash on hand.

In fact, credit cards also offer the convenience of cash withdrawals from ATMs, although such transactions may incur additional charges.

This facility proves incredibly useful when you need to make immediate cash payments at establishments that do not accept credit or debit cards. It also comes in handy when your bank account has insufficient funds to cover certain expenses.

By utilizing the cash advance feature, you gain an additional benefit from your credit card. You can easily transfer money to any bank account using net banking or mobile banking facilities.

In certain countries, like India, sending money to foreign bank accounts requires prior approval from the relevant authorities. However, with a credit card, you can almost instantly transfer money to relatives and friends across India whenever the need arises.

The cash advance feature provides flexibility and convenience, enabling you to manage your finances more effectively and cater to urgent cash requirements.

Also Read: Top 10 Foreign Banks In India

7. Making Investments

One significant benefit of credit cards is the ability to make investments even when you have limited bank balance or cash on hand.

How is this possible? Nowadays, Asset Management Companies (AMCs) that offer Mutual Funds accept credit cards for lump-sum purchases or Systematic Investment Plans (SIPs).

Moreover, you can also use a credit card to buy government bonds and stocks.

This advantage proves particularly valuable when you come across an attractive investment opportunity that you don’t want to miss out on.

In such cases, you can conveniently overcome any cash constraints by using your credit card to make the investment. Subsequently, you can settle the amount due on your credit card during the forthcoming billing cycle, ensuring that you don’t accrue any Annual Percentage Rate (APR) charges. By doing so, you can keep your investment attractive while managing your finances effectively.

By leveraging your credit card, you can seize investment opportunities and diversify your portfolio, even when your immediate cash flow is limited.

Also Read: Top 10 Best Wealth Management Companies In India 2022

8. Quick Card Replacement

In the unfortunate event that your credit card is lost or stolen while you’re abroad, major credit card brands such as Visa International or MasterCard strive to provide a quick replacement within 72 hours of reporting.

The replacement card will be delivered promptly to a designated foreign address, ensuring you have access to it in a safe and timely manner. This means you don’t have to worry about being stranded in a foreign country without any money.

Furthermore, leading credit card issuers offer 24-hour helplines that assist you in reporting a lost or stolen credit card and handle requests for issuing new ones. By promptly reporting your card’s loss or theft, your liabilities become limited. Once the credit card issuer acknowledges your complaint and places the card on a hotlist, you can challenge and refuse to pay for any fraudulent expenses made.

This quick card replacement service and the associated safeguards provide peace of mind while traveling, ensuring that you can swiftly recover from the loss or theft of your credit card and continue managing your finances securely.

9. Global Acceptance

According to a report by London-based RBR, by the end of the calendar year 2018, both Visa International and MasterCard had approximately 38 million merchants worldwide accepting their credit cards. It’s important to note that this figure does not include other credit card issuers such as Diners Club, Discovery, Japan Credit Bureau, and others. RBR projects that by the year 2022, this number is expected to surpass 90 million merchants globally.

Asia, including countries like India and China, is seen as the largest growing market for credit cards.

Based on these facts, it’s evident that your credit card will be widely accepted almost anywhere in the world by the majority of businesses. This eliminates the need to carry cash when shopping at stores. Credit cards transcend borders, eliminating the necessity of carrying multiple currencies while traveling abroad.

With global acceptance, credit cards offer convenience, ease, and a seamless payment experience, allowing you to make purchases and transactions effortlessly, both domestically and internationally.

10. Loans on Credit Card

In recent times, many banks offer instant loans to credit card holders who have a good spending and repayment record.

These loans are often approved and disbursed within a span of three to four days. Moreover, credit card holders can also avail this facility from other banks.

Typically, the lending bank requires minimal documentation when granting a loan based on your credit card.

Interest rates for loans on credit cards vary between banks and their respective policies. However, most of these interest rates are on par with regular personal loans or slightly higher, which makes them more appealing.

This benefit proves incredibly useful when you require a loan urgently and cannot find guarantors or wish to avoid cumbersome processes.

By utilizing the loan facility on your credit card, you can obtain funds swiftly and conveniently, easing your financial burdens without the need for extensive paperwork or complex approval procedures.

Conclusion

In conclusion, a credit card can be a valuable asset that provides various advantages, ranging from financial security to global acceptance, quick card replacement, and access to exclusive benefits. However, it is crucial to use your credit card wisely to fully reap these benefits.

A credit card can serve as a lifeline during financial emergencies, help you make investments, and provide peace of mind. Nevertheless, it’s important to exercise responsible spending habits and avoid accumulating excessive credit card debt, as it can lead to financial hardship and negatively impact your credit score.

If you already possess a credit card, being aware of these benefits allows you to make the most out of your card and derive better value from it. On the other hand, if you plan to apply for a credit card, it’s essential to evaluate your spending habits and ensure they align with responsible credit card usage.

By utilizing your credit card wisely and understanding its advantages, you can navigate financial challenges, enjoy enhanced purchasing power, and effectively manage your finances.

FAQs – Benefits of Credit Cards