Should you get Credit card or not | Best Credit cards 2021

Best Credit cards in India | Should you get a Credit card or not

Billionaires also get a credit card, even when they don’t need it. because there are some secrets about Credit cards that can help you get rich. and by the end of this blog, you know exactly what are the untold secrets about Credit cards.

So, you know what a debit card is right?

It’s a card that deducts money from your bank account every time you use it.

But using a Credit Card is like taking a quick loan from a bank and you have to repay back this money to the bank within a billing cycle, which is usually for 50 days. These 50 days are your interest-free period.

Does it mean you can spend 10 Crores using a Credit Card on your first day? 

Not really. It totally depends on your Credit Limit, i.e how much can you spend using your Credit Card is decided by the bank, based on your Income level, Credit Score, and so on.

So basically, Credit cards give money to people that they don’t have and that creates problems.

Problem #1: 

They Promote Impulse Buying. Every website you go to will show you an advertisement to buy products and services. It’s not wrong to buy. But buy only those things which you need. Credit cards will lead you to buy that products and services which you actually don’t need.

Problem #2:  

They put you in a lot of DEBT.

The Interest Rate of Home Loans is around 8%, Car Loan is around 10%, Personal Loan is around 12%. But, Do you know the interest rate of Credit Cards is Between 24% to 42% per annum.

If you pay back the bill of your Credit card within your billing cycle you’ll be charged 0 interest. But if you were late by just one day. You have to pay interest not just for one day, but starting from the day you made the transaction. 

Also, late payment charges will be applied. You have to pay 18% GST on the overall interest accruing and if you make a new transaction, before paying off this old amount, then this new transaction won’t have any interest-free period and it’ll start attracting interest from Day 1.

Apart from these payments, 2 solid ways that Credit Card companies make money are 

(a) Cash withdrawal interest 

If you withdraw cash using your Credit Card from any ATM machine, then you start paying interest right from Day 1.

(b) Minimum amount due

If you spend money and fail to pay. then what happened? 

Credit card companies tell you to pay 5% of the amount and they won’t be charged a late payment fee. But you will still end up paying high-interest rates on the remaining amount later. So the day you get your Credit Card, Swear to God that no matter what, you will pay your dues on time, because if you don’t you will be in deep trouble.

Problem #3: 

Credit Cards can spoil your Credit score.

A Credit score is a 3-digit number, ranging from 300 to 850. This score is used by banks, credit card companies and even Insurance agencies to decide whether or not to offer you credit and what the interest rates would be. 

This means if you want to take a loan to do business or buy a house then having a good Credit score is very important. In India, some of the bureaus/departments keep track of our Credit scores like CRIF, CIBIL.

The Top 4 Reasons why you should have a Credit card

1. Credit Cards have Benefits

If they are charging you so much interest surely they must be offering something in return first. Depending on the Credit Card you opt for, you can get benefits like

(a) Reward points – It will help you in getting discounts on hotel booking, flight tickets, movie tickets and even filling fuel to your vehicles.

(b) No Cost EMI offers – you will not be charged for extra EMI charges while buying things on EMI.

(c) Cashback offers – you will get cashback for doing payments through credit cards.

(d) Free access to Airport lounges, food, and other services 

(e) Priority Airport Check-ins

(f) Insurance cover 

2. They are Universally Accepted

Credit cards can work across the world. but a debit card isn’t. If you have to travel abroad then you must have a credit card. As it will help you pay at numerous places like at the International Airports, cabs, restaurants and so on without exchanging currency.

3. Strong Buyer Protection

These days, we seem to make a transaction at some new website every month. The good news is, Reserve Bank of India has shifted the responsibility of proofing customer liability to the bank. This means, if you don’t get your order, you can ask the credit card company to raise a dispute against that transaction.

This is called ‘ChargeBack’ and it protects you from fraudulent transactions. But read the terms and conditions of your Credit Card carefully to ensure that they do offer the ‘Charge Back’ benefit.

4. Credit Cards build your Credit Score

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Credit Score is a very important number and one of the ways of building it is to get a Credit Card, use it to spend small amounts, but repay it back on time. This repaying on time, over the years, is what will build your score and when you have a good Credit score, this is what happens…

(i) You can get a good premium for insurances.

(ii) You can negotiate the interest rate on your Credit Cards.

(iii) Most importantly, you’ll get a better interest rate on your loan. be it for Education, starting a business, or to get your Dream House.

By now you know that Credit Cards can either make or break you. So to use them wisely. You are not taking Credit Cards for money, but to build your Credit Score.

Always read the terms and conditions carefully before taking a Credit card. The job of an agent is to just sell you a Credit Card. It’s your job to find out whether that Credit Card is useful for you or not.

Bonus Tip 

Always opt for an Auto debit facility Auto-debit helps you from falling into the hell hole of paying interest, taxes, late fees, and getting a bad Credit Score.

Best Credit Card

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