What are the Pros and Cons of Having a Credit Card?

credit card

To a smart user, credit cards can be a source of invaluable financial support. Besides, benefits like cashbacks, rewards and fraud protection make it a compelling financial tool to possess. It allows you to avail instant cash from the issuing company without paying any interest within the grace period.

So, you get to make interest-free purchases without any hassle. However, unplanned use of credit cards can land you in a financial mess with mounting interests. Therefore, before using credit cards, you must be aware of some pros and cons that they come with.

Pros of having credit cards:

  1. Flexibility The timing of your salary may not always match with your financial needs and urgencies. You may not have sufficient cash to make purchases at all times of the year. A credit card comes handy at such times. You get the flexibility to buy now and pay later.
  1. Fraud protection – Credit cards come with safeguards against any fraud. Some cards like the Bajaj Finserv RBL Bank SuperCard come with security features like ‘Zero-fraud liability cover’ and ‘In-hand security’ which gives you protection against any cybercrime. The SuperCard also comes with some industry-first features like an emergency personal loan on the unused credit limit, option to repay in easy EMIs and ATM Cash withdrawals with zero interest on the withdrawn amount for up to 50 days.

  2. Emergency loan – Sometimes, you require a large sum of money for meeting immediate needs like a medical emergency. A credit card can come in handy in such situations as well. 

Some credit cards come with an option whereby you can avail an emergency loan on your unutilised credit limit with an interest-free repayment window of up to 90 days. Moreover, an option to repay the loan in 3 easy EMIs makes them a viable financial tool.

  1. Reward schemes – Regularly swiping credit cards bring reward points, cashbacks, gift cards, etc. Hence, the more you pay with these cards, the more benefit you get.

Some cards even come with offers like milestone bonuses on the purchase of plane tickets, fuel surcharge waiver for swiping at petrol pumps, etc. So, people who travel or drive their cars frequently can apply for credit card with these benefits.

  1. Improved credit rating – Credit cards are an excellent instrument for enhancing your CIBIL scores. A healthy credit rating can help you in availing loans and advances. If you don’t max out your credit limit and make regular repayments without any fail, your credit score will significantly increase.

So, you see, credit cards are a great way to bridge the financial gap along with multiple other benefits. Nevertheless, the careless use of these cards has potential disadvantages as well.

Cons of having credit cards:

  1. Overspending – The ease of spending with a credit card makes it tempting for unnecessary purchases. Thus, you end up buying more than you need without realising your repayment capabilities. If your income doesn’t suffice your financial behaviour, you may find it difficult to repay it all together.
  1. High interest rates – Although credit cards give ease of spending, they attract high interest rates. These high interests may even lead to a financial mess if not repaid within the due date.
  1. Selection of the wrong card – The variant of this card available in the financial market sometimes confuse you. You may not be clear which one can suit your financial requirements better. So, in expectation of getting a higher credit, you end up applying for a card that instead pulls down your credit score. 

Thus, keep in mind these pros and cons before you apply for a credit card. It is better to go through the features of credit cards and match them with your purpose before getting one on your name.