Credit Cards have become an integral part of our financial lives. When used responsibly, you can enjoy benefits that can significantly improve your financial health. Let us explore how they improve finances by building credit, making purchases affordable, earning rewards, and more:

1. Building your credit scores

The most significant financial benefit of using the best Credit Card is its ability to help you build a strong credit score. It is a crucial factor that banks consider when you apply for Loans or credit in the future. A decent credit score makes you eligible for better interest rates and Loan terms. Making payments on time demonstrates financial responsibility, which is reported to credit bureaus and boost your credit score over time.

2. Making purchases affordable

Credit Cards offer flexibility for making purchases. They provide the option to convert significant expenses into affordable equated monthly instalments. This feature helps you spread the cost of a purchase over a longer period, making it more manageable for your budget. Suppose you want to purchase a new laptop worth Rs. 60,000. Instead of paying the full amount upfront, you can opt for a 12-month EMI plan.

Assuming an interest rate of 14% per annum, your monthly EMI would be approximately Rs. 5,495. This breakdown makes the purchase more affordable and helps you avoid straining your finances.

3. Earning rewards and perks

One of the most attractive advantages of using Credit Cards for personal finance is the opportunity to earn rewards and perks. Many provide cashback, points, or miles on your purchases, which add up to significant savings over time. For instance, if you spend an average of Rs. 10,000 per month on a Credit Card that offers 2% cashback, you can earn Rs. 2,400 in cashback annually.

4. Convenience and security

Credit Cards offer unmatched convenience and security compared to carrying cash. With the rise of digital payments, they provide a safe and hassle-free way to make transactions. Nowadays, they feature contactless technology, letting you pay by simply tapping your card on the payment terminal. This eliminates the need to handle cash or swipe your card.

5. Budgeting and expense tracking

Credit Cards are valuable tools which you can use for budgeting and tracking your expenses. Most providers offer detailed monthly statements that categorise your spending, making it easier to analyse your financial habits. By reviewing your Credit Card statements and using budgeting tools regularly, you can identify if you are spending too much on dining out and adjust your habits accordingly.

You may also use the EMI calculator to convert large purchases into equated monthly instalments. Enter the transaction amount, interest rate, and tenure to get the EMI amount, total interest amount, and total payable amount.

Conclusion

Knowing how Credit Cards improve finances can be an extremely powerful hack in leading a happy life free from worries. Pay your bills on time, keep your credit utilisation low, and monitor your transactions regularly.