Credit Card - Your Friend Or Foe?

During these times, owning a credit card is not a luxury but a necessity. The credit card is like a double-edged sword having both favorable and unfavorable consequences. Credit Cards are important financial tools that help cardholders achieve their financial needs. However, cardholders need to be very cautious while using a credit card and not indulge in overspending. The cardholders should make sure that they remain in the good books of the bank when they apply for a credit card or it may hurt them back. Hence, it's critical to be aware of how credit decisions can influence you. The way you handle these obligations will influence a lot of your future decisions. 

Why Is A Credit Card Your Friend?

Credit cards can help you enhance your purchasing power to achieve your financial goals. When you use your credit card wisely, you can simply earn money by spending money. Almost all credit cards provide customers with reward points or cashback on their spending. It's virtually free money if you keep your balance low on credit cards and don't pay interest. Just keep in mind that carrying a balance from month to month will accrue interest. 

One important thing to remember is to use your credit card only when you are in desperate need of money. Using credit cards for making day-to-day purchases will help you develop the habit of overspending. 

Lifetime free credit cards shall be the right option for first-time applicants applying for a credit card. Amazon Pay ICICI Bank credit card, IDFC First Select, and HSBC Visa Platinum are some of the best lifetime free credit cards offered in India.   

How Can Credit Card Be a Foe?

The credit card can be your worst enemy if you do not pay the outstanding dues on your credit card. The bank charges customers with hefty interest rates and late fee payment charges. The bank offers a lot of rewards and benefits to make you spend more whereby you indulge in overspending and thus, you get caught in a debt trap Furthermore, it shall harm your credit score. 

For instance let us say, If you have a credit card debt of Rs 1,000,000 and wish to pay only Rs 5,000 per month, you will be able to pay off the debt in 33 months, spending around Rs 1,63,000, including bank late payment fees.

How To Build Credit Score?

You can build a credit score by making timely payments of your outstanding dues on your credit card. When you pay your credit card bills on time, it reflects on your credit report. You can learn to maximize your score by understanding what factors will affect it. Making on-time payments, keeping your card balance low, and diversifying the types of credit you use are the best ways to keep your credit score as high as possible.

Bottom Line 

To summarize, credit cards are important in increasing the exciting spending power of the customers to achieve their financial goals. The customers need to compare their credit cards before applying for a credit card. 

You can simply compare credit cards online to find the right fit for yourself. The thing to remember is that you should never indulge in the habit of overspending as it may lead you towards a debt trap. The cardholders should be very careful while using their credit cards.