Top Essential Insights into Your Credit Card

Credit cards: what are they basically, they’re a phenomenon of modern life in a way hovering on the thin line between a comfort and a risk. Defying financial gurus’ warnings about them, credit cards have become part and parcel of our lives. OK, let us get into the best approaches of utilizing these wonderful pieces of plastic.

This is why they say that we should dispose credit cards as if they are old newspaper to our Financial Advisor. The core is that they are loans which are expected to be paid back, and if not, can cause a disaster in the financial world.

Still, it must be noted that credit cards offer unprecedented ease of use and buying capability like Axis Bank Atlas Credit Card that provides lot of benefit. the hallmarks of which are found in the following facts. They pop up as heroes, and enable the users to reach further than they are able, safely. Thus, sticking to payment ‘due dates’ may transform a credit card into a loyal companion.

Thus, it is high time to analyze the strengths and weaknesses of using this financial instrument.

What is Credit Cards?

Credit card is an undesignated line of credit for acquiring purchases. Unlike debit cards that allow you to spend the money you have in your account, credit cards make available to you amounts of money that you do not have, but which you promise to pay after a certain time.

Advantages of Having Credit Cards

1. Convenience

The credit cards were first launched in the history in New York in 1951 by Franklin National Bank and brought into operation in India in the year 1981 stripped the concept of shopping off the recurring cash. From touching card readers in stores to withdrawing money online, they preserve transactions, take the weight off people’s pockets and encourage confidence.

2. Deferred Payment

For every credit card, you are provided with an interest-free period of about 45 days either from the date of purchase or of the statement handout. This comes as a great asset during emergencies as it allows the use of restricted cash to access the necessary items for some time.

3. Cash Access

Credit cards in particular mean that cash rasp offs do not exist anymore. From closing a wage disparity or covering emergent costs to providing quick economic support, credit cards are an ace up one’s sleeve.

4. Rewards and Discounts

In sync with numerous counter partners, credit cards offer tempting offers in terms of discounts, cash backs and point rewards. Such incentives include free tickets, discounts on overpriced products, and deferred installment schemes arising during sales thus unveiling desire.

5. Dispute Resolution

Improving on the security of transactions, credit cards inform clients on their spendings through mobile applications and emails. This functionality eases the task of dispute resolution to do away with cases of billing disparities even when physical receipts are not available.

Thus, a credit card is not very sinful when used wisely; however, it is not devoid of sinful financial implications when overstressed. It is, therefore, possible for credit cards to change from being financially used instruments to partners, provided that wise spending and timely repayments are practiced.

Disadvantages of owning a credit card

Before proceeding we want to bring up that it should be noted that a credit card can be a valuable and useful tool in dire situations. However, man’s mismanagement of it allows the atmosphere to turn that ally into an opponent within a short time. Here’s how it can lead to detrimental outcomes:Here’s how it can lead to detrimental outcomes:

1. The illusion of Wealth that we Don’t Have

Credit cards contribute to this by making us feel that we are more financially capable than what is actually the real, true situation. It lack of strict financial discipline, it can aggravate our debt level. They lure people into decision-making processes referring to expected incomes in the future – something which, as far as we know tomorrow, is uncertain. The COVID-19 pandemic exemplified this aspect unpredictably on a global level, although freezing the loans and credit payments for a temporary period. Personal emergencies hence, if not well handled, add to our numerous financial problems.

2. Escalating Credit Card Debt

A number of studies suggests that outstanding credit card bills in India touched a mammoth Rs. 42,100 crore by May 2016. Such a situation points to an actual concern as illustrated by this figure. Using non-existing funds is a recipe for disaster in our spending patterns; therefore our ability to stick to our discipline and honor our obligations may go to the drain.

It means penalties alongside high interest rates to borrowing money in the hope of a profitable speculation Those who purchase stocks with borrowed funds are threatened with penalties alongside steep interest rates for wanting to achieve a successful speculation.

Most credit card operations require users to make timely payments to the card providers to continue benefiting from the card. One does not negotiate over a bill if he or she has not paid it to settle since penalties together with high interest charges have no room for compromise. Amazingly, there is a minimum payment option that has the remaining balance charged a 3-4% monthly interest unlike personal loans that range between 1. 2-2. 5%. Wheeler has the option of paying off the full amount at the end of the interest free period but this has not been the case here.

3. Cash Withdrawal Charges

Withdraw cash using a credit card and be ready to be charged about 3% as the cash advance fee. 5% with the interest calculated and compounded from the withdrawal date. Unlike any other purchases, cash advances do not come with the grace period; thus, adding onto the various costs.

4. Impact on Income

Through the team of spending before obtaining income, credit card holders reduce their salary at source each payday. Piling up on debt by swiping often and paying just the minimum amount leads people in an infinite cycle of mounting on debt and more financial pressure.

5. Credit Record Implications

Thus, it is possible to underline the importance of being consistent with payments and strengthening a credit history. However, the regular incidences of payment delays or defaults on the payment profiles lower credit profiles and can limit access to crucial emergency loans.

6. Optimal Credit Card Usage

A credit card still serves as an advantage especially when an individual will be able to apply proper measures of using it. Thus, to maximise the benefits of this concept, one has to tackle income, expenses and saving efficiently. Use it to buy items on the cheap, create equity, and absorb emergent costs, while acquiring only as much credit as can be easily paid back. On-time payment improves credit standing which is helpful when in need of more credit.

7. Choose Wisely

Choose credit cards with low annual fees and good conditions for a client. Restricting the use of a card and permitting only two at most helps in regulating the spending of money and establishing worthwhile fiscal security.

Conclusion:

Thus, one credit card, used properly, can be a consumer’s friend for life. Proper management is achieved in a way that will guarantee the safeguarding of cash and as such, improve the purchasing power, thereby creating a better financial future.