How your credit card can help build wealth and not debt

New Delhi (India), October 30: Credit cards, if used wisely, are potent financial tools that empower you to manage your finances strategically. Rather than being debt accumulators, they offer a range of benefits like immediate access to funds for necessary expenses, improvising on your financial goals. If planned carefully, credit cards will help you meet your needs and wants without depleting your savings. 

For instance, that pricey laptop you need for work or that television set you wanted to help you unwind after a tough day at work can be within your reach with a credit card. You also enjoy reward points and cashback offers that can make these purchase experiences even better.

Let’s look at the uses of credit cards and how they can benefit you.

Uses and benefits of credit cards

While the benefits are endless, here are some key uses of a credit card that can help you maximise the advantages -

• Making large purchases – Think of a large purchase like smartphones, TVs, or refrigerators, that cost over Rs 75,000. These could easily put a dent into your savings. Credit cards offer significant convenience in this regard by deferring or letting you make large payments in instalments.

  
  You have up to 48 days to repay the bill and you’ll get rewards in the form of points or the possible cashback you can get using your card. In addition to that, you can avail of credit card offers to lower the product cost and then also convert that considerable sum into far easier EMIs with competitive interest rates. You will get what you want and derive more value from your purchase. 

• Paying bills – A credit card can also prove to be quite beneficial when it comes to paying your bills – mobile, rent, etc. You can repay the credit card bill later (48 days grace period) and gain reward points for each payment. You can also schedule these payments with the autopay feature and ensure they are always made on time to avoid penalties. 

• Building a solid credit history  – Never forget how responsible use of your credit card can improve your credit score and history. Keeping the card balance low, paying all the bills on time – EMIs, credit card minimum balances (or more), etc., all go towards keeping your credit score in the green. A good/higher score shows your creditworthiness and can lead benefits that include getting better loan terms when you need it most.

• Tracking spends for better budgeting - One of the lesser-known uses of a credit card is that it helps you budget better. Cash is difficult to track at times. However, credit card usage, on the other hand, can be easily monitored through your mobile banking app and the itemised monthly statement. The IDFC FIRST Bank Mobile App also helps you auto-categorise your credit card spending so that you can stick to your monthly budget andstay on top of your finances. 

Credit cards’ additional benefits

The more you understand how a credit card works the better they will help you save money every time you use them. Here’s what is in store - 

• Discounts on regular purchases - Many credit cards offer discounts at grocery stores, at gas stations, and while online shopping. For example, a card might offer a 5% discount on groceries every Tuesday so you can time your shopping accordingly to grab those savings. You can also get a discount when commuting on your own through petrol savings, depending on your card. 

• Exclusive offers and cashback - Credit card cashback is a reward program where cardholders receive a percentage of their purchases as a rebate. Simply put, if an item costs, Rs. 5000 you would pay the entire amount but receive a decided percentage, say 10%, as a credit on the card. That means you’ve paid just Rs. 4500. Credit card reward points on each spend all add up and can be redeemed for a variety of benefits that range from travel discounts to merchandise, and discounts on various other services.

• Seasonal discounts - Seasonal credit card discounts are common during holidays and special sales events. For example, a credit card might offer an extra 10% off during an Amazon sale event. Planning your purchases around these events will maximise benefits and help you save.

Card-specific benefits

Let's explore a few card-specific benefits that cater to specific lifestyles and uses - 

Credit cards for shopping - When choosing a credit card for shopping, consider your go-to brands/stores so that the offers are aligned. With IDFC FIRST Bank Credit Cards, customers can enjoy exclusive discounts at various retail outlets, cashback on purchases, and extended warranty protection.

Travel credit cards - Travel credit cards offer perks such as complimentary airport lounge access, air miles redeemable for flight tickets, insurance on lost bags, cancellation insurance for flights and hotels, and much more – ensuring seamless journeys.

For example, the FIRST Wealth Credit Card provides up to 10X reward points on monthly spends of Rs 30,000 or more and discounts on airport fast-track immigration services at over 450 destinations worldwide. Such features allow you to get more on every trip for less money. Whether you travel for work or leisure, exploring credit cards specific to travel can help you save more.

Lifestyle perks - Lifestyle credit cards are another example that cater to specific preferences. They offer benefits like discounted/free movie tickets, access to premier golf courses, dining offers at exclusive restaurants and health and wellness centres and much more.

To give you an example, lifestyle credit cards like FIRST Select Credit Card offer 6X and 3X reward points on online and offline purchases respectively, for spending up to Rs 25,000 per month.  When choosing a lifestyle credit card, consider how it aligns with your hobbies and lifestyle and look for one that adds value to them. 

Choosing the right credit card mattersChoosing the right credit card is a decision that requires careful research and consideration. A credit cards does not have to be a debt accumulator. IDFC FIRST Bank Credit Cards are the best example of a uniquely designed range with tailored features and benefits. All you need to do is look for a card that matches your needs, your lifestyle, financial goals, and even your budget, then make it your best friend and a great financial tool for everyday use.

Disclaimer: This article is published in association with IDFC First Bank and not created by TNM Editorial.