A credit card is a type of payment card where the payment at a point of sale is made from a line of credit instead of the card holder’s bank account. A credit card is issued by a financial institution, usually a bank. The cardholder must then pay back this amount at the end of every billing cycle, which is usually at the end of a month. If the cardholder fails to repay the amount on time, late fees and additional interest fees will be charged on the amount owed. The credit card holder’s credit history and income determine the card’s ‘credit limit’. Vijaya Bank credit card provides individuals with great deals on credit cards according to their needs.
Credit card is a great way of managing money, they have several benefits and can be helpful in the time of financial emergencies-
- Additional Liquidity- A credit card allows the users to have additional liquidity, which can be extremely beneficial in times of an emergency. It allows the users to use a line of credit, so they can make payments even when they are not carrying cash with themselves. It can be beneficial in emergencies such as while paying for hospital bills or when the user faces an obstacle while traveling.
- Convenience- While using a credit card, the cardholder does not have to worry about carrying cash or their checkbook everywhere, instead, they can use a credit card. Credit cards are universally accepted, hence making it convenient for the user in time of emergencies.
- Helps in improving credit score- When a user makes use of credit cards to make a payment and then pays their dues timely, it helps in improving their credit score. This can be beneficial at the time of availing a loan in a financial emergency and it also helps them get a higher credit limit because the limit is determined by the user’s credit score and income. It shows positive repayment capacity.
- Interest-free periods- Credit cards have interest-free periods ranging between 20-60 days, no interest is charged on the credit amount in this period. It is beneficial for users who use credit cards in emergencies and they can pay back the amount within this grace back. It helps them save money on interest and other charges when they might be facing a financial emergency. A credit card can be used to purchase essential as well as non-essential products and services.
- Rewards and discounts- When a user makes a payment through a credit card, it avails them of several rewards and discounts. The user can get discounts on paying bills, flight tickets, etc. They can also get rewards such as vouchers and gifts. Credit card programs also give cash back rewards on prompt repayment of the amount owed.
- Insurance- Most credit cards come with insurances that many users may not be aware of. The user can insure things such as travel insurance, product insurance, and rental car insurance when they make payments through a credit card. This can be useful in emergencies.
- Safety- Carrying a credit card is safer than carrying large amounts of cash everywhere. Large amounts of payments can be made through credit cards also. They are also safer than debit cards because in case of fraud, in a debit card the amount is withdrawn from the user’s bank account and it may take time for the bank to reverse these transactions. While on a credit card, the user can just notify the bank and not pay the transaction amount, hence their money is not lost.
- Expenses records- A credit card maintains a record of each payment made by the user through the card, and the details are shown in the credit card statement. This can be used by the user to keep track of their payments and purchases, which can be useful for monthly budgeting and tax purposes.
- Repayment flexibility- The user has the option to repay their credit card bills through equated monthly installments (EMI) which allows them to know the required amount that needs to be paid every month. Banks also offer the option to the users of paying the minimum dues which would allow them to continue their line of credit.
Credit cards are very helpful in emergencies as it has several benefits but the user also needs to be responsible in making the repayments on time otherwise additional charges and high rate of interest is charged on the amount due.
Also read this: Way to avail Credit card
