Credit card advantages and disadvantages in India
If you are new to the world of credit cards in India, then chances are you might be wondering what all the fuss is about.
The thing with credit cards is that they can be great, but they can also be dangerous if used unwisely.
To determine whether or not you should apply for one of your own, you must understand the benefits and pitfalls that come along with using them. This guide will tell you everything you need to know about their pros and cons.
The Advantages Of Using A Credit Card
The most obvious advantage is that you can purchase goods and services without any cash on hand.
Many people who don’t have enough money to pay for something upfront will use their credit card to make the purchase, which they can then pay off later.
Credit cards also allow people who are carrying large amounts of debt from high-interest loans or bad spending habits to rack up more debt.
Another advantage of credit cards is that they can help your credit rating. If you use your card responsibly, you will have an easier time getting a loan or mortgage if you need one later on. You may also get better interest rates on your loans.
Finally, credit cards offer protection against fraud. For example, if your wallet gets stolen while you are shopping at the mall and someone goes on a shopping spree with your card, not only do you not have to pay for those purchases but some issuers may reimburse some of your expenses.
The Disadvantages Of Using A Credit Card
If you are using a credit card or thinking of applying for one, you need to understand the following pitfalls related to it:
● Credit cards can have an annual fee. This is usually waived for purchases made within the first year but it is important to be aware that you might have to pay this upfront.
● Interest rates on credit cards can be high. It is important to read your contract carefully because if you fail to make timely payments, you may end up paying more than your original purchase price over time. If you don’t think you will be able to meet these obligations, then a credit card might not be right for you.
● If the worst happens and your account becomes delinquent or even goes into collections, all of the points about how easy it is to use will no longer matter.
● You could also find yourself unable to use rewards points when they would otherwise expire or being locked out from buying products from companies with exclusive deals through their credit cards due to payment history. In some cases, your interest rate could even increase.
● The sooner you start building good credit by making timely payments, the less risk there will be that things like this happen. When shopping around for a new credit card, always compare them based on APR as well as other features before signing any contracts.
Consider whether you’re someone who can afford to spend responsibly.
One rule of thumb: credit cards are typically only worth the benefits they offer if they help you save money or earn rewards faster than what you would get with cash back or loyalty programs without one.
How to apply for a credit card in India?
If you are a citizen of India, there is a good chance that you don’t have a credit card to use.
However, there are plenty of advantages to having one. The process for applying for one is also pretty simple.
● First, you will need to choose what type of credit card you want. There are several different types out there, but the two most popular ones in India include Visa and Mastercard. These cards can be used at any business or establishment that accepts them.
● Second, you will need to find an Indian bank that offers credit cards with your desired company logo on them.
● Third, head over to the website of your chosen bank and apply through their online application form.
● Fourth, take a selfie while holding your ID and fill out the application form. After this step is done, all you have left to do is wait for the approval.
Depending on how busy the staff is, you might receive your card as soon as five days later.
Once approved, call up your bank and let them know which merchants they can spend money from your account at.
You will then have access to buy anything from restaurants to clothes without ever needing cash again.
There Are Different Types Of Credit Cards Available
There are many different types of credit cards available, each with its own set of advantages and disadvantages. Some cards offer perks such as cash back on gas or groceries, but others have high-interest rates.
It is important to consider which type will work best for your lifestyle before applying for a new card. Below is an overview of some popular types:
● Secured Cards: This type requires applicants to put down a security deposit when opening an account, which can range from Rs. 16000-1,60,000. If you make your payments on time and use the card responsibly, this is a great option because you’ll get access to funds right away without having to wait. On the other hand, if you don’t meet these requirements then you’ll lose access to your money even if it was just sitting there earning interest while waiting for approval.
● Rewards Cards: These types offer points that can be redeemed for rewards, like travel vouchers or gift cards. But since they usually come with higher fees and limits on how much you can earn, they may not be worth the extra cost depending on what you plan to do with them.
● Student Credit Cards: These are designed specifically for people under the age of 21 who want to build up a good credit history.
When Should I Use A Credit Card?
The first time you use your credit card, you will have to pay an annual fee. When you are deciding whether or not to use a credit card, consider that it can be hard to recover any lost money if the card gets stolen.
It is also worth considering that some stores don’t accept credit cards, so there will always be some places where you cannot use them. One way to avoid these problems is by making sure to register your card with the authorities and keep track of its balance so you know when payments are due.
For people who want to save on interest charges, then paying for purchases in full each month is the best option. If this doesn’t suit your lifestyle, then setting up a repayment plan is recommended before you start spending more than what you make per month.
There are many benefits to using a credit card like access to travel rewards points which can be accumulated over time as well as no penalties for late payments.
Is It Cheaper To Pay By Cash Or Card?
It is cheaper to pay by cash than it is to pay by credit or debit cards. The reason for this is that the fees associated with these transactions can be significantly higher than if you were paying in cash.
For example, Visa’s global average interchange fee is about 2% of the transaction. But there are many countries where it is much lower, such as Brazil at 0.4%.
Some countries have even banned them altogether, like Ecuador and India where fees are capped at 0.5% and 1%, respectively.
On top of that, the interest rates on credit cards in India are notoriously high at around 20-30% (compared to 6-8% for cash loans).
That said, not everyone needs money right now so it might be better to save up and buy something later when prices will likely go down.
And lastly, many people use their credit cards for safety reasons since no one wants to walk around with thousands of dollars worth of cash on them.
Credit cards can be a great way to establish a good credit score, but they can also be risky.
If you want to take advantage of the many benefits that come with owning a credit card, it is important to make sure you use it wisely.