Hello all!!
In last two episodes we saw the situations in which we should not use the credit cards. We also saw nine things to know about credit cards which includes annual fees, real life fraud cases, interest rates on EMIs and other six important things. In this episode we will see the five reasons you should use a credit card. Ultimately, we all struggle for a better life, better standard of living, good food, good relationships, latest technologies and better financial positions. All that can be achieved by us by following one word ‘CONTROL’ over the finances and personal finance.
Now one may ask a question that if we have to control over our finances why we are recommending you to have credit card and use it wisely? Why we are not saying do not go for a credit card? Let’s find out some interesting facts which strongly recommends to have a credit card but use it wisely.
1)
Higher Education –
If someone or his/her children wants
to pursue for a higher education and want to apply for it online, credit card
plays important role. Now one can ask us, why not to use debit cards? Debit
card hardly provide flexibility of payment in foreign currencies. Most credit
cards provide that flexibility. Moreover, in many countries foreign debit cards
are not accepted but credit cards are accepted. For example, if bank of Abu
Dhabi issues debit card, who will accept that in India? But if resident of Abu
Dhabi has American Express credit card, it will be accepted in India. Same is
with Indian banks. Few higher education examples are CFA, FRM, IFRS, doctorate,
PHD in foreign countries etc. But for that you should have a Credit card and so
we recommend having one.
2)
Offers, Rewards, Discounts, Miscellaneous benefits –
Almost all the credit cards give
offers, cash backs, reward multiplier offers etc. If we read the second blog in
this series for credit cards, it is clearly mentioned that if offers are really
saving the money, we can opt for one. For example, Axis bank Flipkart card,
ICICI Amazon pay card, SBI card with 10% off on Flipkart and many other online
sites, American Express reward cards (4 points equal to Rs.1/- [This is current
offer and may not be available or may be changed in future]). If we are saving money,
we should use credit cards but make sure you have lower debt on your head
before using the card, you should be 200% sure that you can afford to pay for
the things you want to buy using credit card and can also afford post buying
expenses e.g., Insurance, electricity bills, maintenance etc. If you are well
capable, go ahead and a have such a rewarding credit card. I recently received
Rs2000/- amazon coupon by using credit card reward points. In short in a way I
received Rs2000/- cash. Other Miscellaneous benefits like complementary airport
lounges, early launch discounts are also offered on credit cards.
3)
No cost EMI –
EMI is equal installment for the
borrowed money or the money you used through credit card. If you want to buy
such things which are costly e.g., Refrigerator, air conditioning etc. you can
choose EMI option so that you will not have to pay big sum at one go. If you
are getting no cost EMI i.e., zero interest rate but only a small processing
fee, this will benefit a lot because you are saving interest and still not
paying the big sum together. But make sure you do not have any other debt
burden and can afford to pay EMIs after all the existing EMIs, investments,
household expenses etc. Also make sure your income will be stable over the
period of EMI tenure. Make sure you are not buying further big things using
credit card or personal loan at least till the EMI tenure ends. Well, having
that said, go ahead and have accredit card and use it for EMI purpose.
4)
Sudden expense –
Emergency never knocks the door but
directly enters the room. It is quite possible that in a particular month you
exhaust with all your money and an emergency arises. Go ahead and use credit
card to come out of emergency within short period of time. But make sure you
are simultaneously creating funds to settle credit cards. If you fail to do so,
I have already mentioned the consequences of default in credit card payment in
my previous blog ‘Nine things to know about Credit cards’. I strongly urge you
to read that blog too. Sudden expense includes, medical emergency, if your
child needs something for his school or college especially for projects,
electronic gadget failure, Mobile phone lost or gets damaged for any reason,
someone invites for function and you need to pay for his/her gifts etc. We
recommend go ahead and use credit card.
5)
Traveling Overseas –
It is highly recommended to have a
credit card with higher credit limit when you want to visit foreign countries.
Your debit cards may hardly even work in that country. You may lose your cash
due to travelling, hotel bills, buying things like food, shopping etc. When you
are on tour, we recommend do not use the cash unless it is necessary. Keep the
cash handy. Use Credit Card. When you return first thing is to settle the dues.
No doubt you may end up paying currency exchange convenience fees extra over
the amount you paid. Still keep the cash handy, you never know when the cash
will be helpful. Make sure you either have sufficient balance on credit card
and also sufficient limit thereon or at least carry two credit cards with
little lower limit. We recommend to have credit limit of at least 1500$ for 10
days visit. If the visit is longer, then simply keep on paying the dues after
you exhaust 75-80% limit. This will ensure you have sufficient money to clear
all the payments in foreign countries. If you are traveling with family then
keep on paying the credit card dues frequently, may be weekly once. Most tours
are corporate tours and the pay ‘per dim’ i.e., some amount each day but all in
advance. Meaning let’s say you get $50 per day for your USA trip and your visit
is for 10 days, you get $500 in advance in either cross border cards or in cash
sometimes or both. But believe me that money is not at all enough. Unless you
are at higher position in the corporate world, this per dim is not sufficient.
Higher positioned person gets $100 or more per day. Now see even if the person
is at higher position or at lower position, cab rates are same for both, food
bills are same (in fact food bills are paid separately for high rank person in
corporate), recreation rates are same, alcohol rate is same for both but still
lower rank gets less than half amount than high raked person. Which is I
believe little unfair but we can’t do much in this case. So, check how much
‘per Diem’ are you getting and get the credit card accordingly. So, we strongly
recommend you to have a credit card and use it if you are traveling abroad.
6)
Miscellaneous Benefits –
Some miscellaneous benefits like, complementary
airport lounge access priority passes,
Conclusion – If you can enjoy cash back, discounts and
rewards, if you are traveling abroad or pursuing higher education, or you have
an emergency, Polyblogger.com recommends you to use credit cards. But keep
settling your dues time to time and do not create financial burden by buying
thing one after another frequently unless you afford to pay it. In short keep
‘CONTROL’ or credit card usage and you can ripe the real benefits of Credit
cards. Thank you for reading the blog it till the end; but keep on reading such
other exciting blogs. Thanks again.
