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People often think credit cards will increase their expenses and lead to unnecessary debt. However, this isn't true. They are a smart financial tool. If used wisely, you can reap numerous benefits. Learn about the 5 major benefits of credit cards.

People often shy away from the mention of credit cards due to fears of debt, increased spending, and EMIs. This is why debit cards are considered safer for everyday purchases. But the truth is that if used wisely, credit cards can become more than just a payment method, but also a smart financial tool. When used wisely, credit cards not only simplify cash flow management but also offer numerous benefits like rewards, security, and a better credit score. Let's explore the 5 major benefits of credit cards that every user should know.

5 Major Benefits of Credit Cards

1. Universal Acceptance – Not Only in India, But Abroad

According to HDFC's website, the biggest strength of credit cards is their universal acceptance. These cards are accepted almost everywhere in India as well as abroad. Credit cards are often preferred for services like hotel bookings, flight tickets, or car rentals because they make it easier to collect security deposits or extra charges. Credit cards prove to be more reliable here than debit cards.

2. No Worry of Immediate Deductions – Grace Period

Money is deducted from your account as soon as you make a payment using a debit card, but this is not the case with a credit card. A credit card offers a grace period during which you can make payments later. This has two major benefits:

Interest Earnings: Your money remains in your bank account until your credit card bill arrives, allowing you to continue earning interest.

Financial Flexibility: The grace period eliminates the need to check your account balance frequently. You get some time to process payments, making it easier to manage your finances without immediate pressure.

3. Better Fraud Protection

A major advantage of credit cards is their safety. If fraud occurs, money isn't immediately withdrawn from your bank account. You can block your card and file a complaint. Most credit card companies offer a "zero liability" policy, meaning you won't lose money for an incorrect transaction. However, fraud with a debit card can immediately impact your account balance.

4. Cashback, Rewards, and Extra Benefits

Using a credit card not only allows you to spend money but also earn money. Most cards offer cashback offers, reward points, sign-up bonuses, and more. These points can be redeemed for flight tickets, hotel bookings, shopping, or gift vouchers. Many cards also offer airport lounge access, dining discounts, and travel offers.

5. Helps strengthen your credit score

If you plan to take out a home loan, car loan, or personal loan in the future, a good credit score is crucial. Proper credit card usage, meaning timely bill payments and spending within your limit, strengthens your credit score. Many credit cards also offer features like travel insurance, purchase protection, and car rental insurance.

FAQs

Q1. Is it safe to use a credit card?

Yes, if you pay your bills on time and spend within your limit, it's completely safe.

Q2. Does a credit card increase your credit score?

Yes, regular and responsible use improves your credit score.

Q3. Is there interest during the grace period?

No, if you pay the entire bill within the grace period, no interest is charged.

Q4. Credit card or debit card – which is better?

Both have their own advantages, but a credit card is more beneficial in terms of safety, rewards, and credit score.

Q5. Should everyone have a credit card?

If you can control your spending and make timely payments, a credit card will be beneficial.