There are several benefits of Credit Cards of which you may be unaware.
Other than giving you instant money and buying power, you can also avail several exclusive benefits from your Credit Card.
Once upon a time, credit cards were the privilege of the very affluent and famous people. Not everyone could get one. At best, prosperous businesses could apply for one in their name or that of top executives.
Today, almost every woman and man in India from the middle-income group can apply and get a credit card from their bank with fair ease.
All they need is a good credit score. Sometimes, you may have to transfer salary to the bank that issues a credit card.
Others are more lenient and require you to meet certain criteria such qualifying income, Permanent Account Number (PAN) and proper, verifiable address proof.
In fact, credit card industry in India has become so competitive, banks are finding it hard to find new applicants.
Hence, they send emails that make excellent offers to new credit card customers. Others try and attract customers with superb benefits for credit card holders.
If you already hold or wish to apply for one, here are top 10 benefits of credit cards you may not know.
Depending upon your type of credit card, here are some excellent benefits you get.
Top 10 Benefits of Credit Cards
Here I will discuss the topmost benefits of credit cards. As I said earlier, benefits may vary according to issuer and level of membership.
1. Peace of Mind
Undoubtedly, peace of mind is the greatest benefit any credit card gives you.
Holding a credit card means you will always have money to spend, though you have no cash. This means you can pay for any service or buy something in emergencies.
Most hospitals, pharmacies and other emergency services accept credit card payments.
You need not worry about meeting any unexpected and sudden expenses that are not covered by insurance.
Nor do you need to run helter-skelter to borrow money from relatives and friends for such expenses.
This peace of mind compensates more than adequately for any annual membership fees you pay for the credit card.
However, to get this benefit, you have to ensure there is an adequate balance on your credit card by using it prudently and only when the need arises.
2. Online Shopping Benefits
Major online stores like Amazon and Flipkart, among others, give special and instant discounts if you pay using a credit card from specific banks.
These discounts range between two and 10 percent of the purchase value. Further, such discounts for online shopping are available round the year and not limited to sales or festival seasons only.
Another amazing benefit of credit cards for online shopping is facilities to pay in installments.
You might not have sufficient balance on the credit card while shopping for something expensive.
However, you can pay for your purchases up to 24 months in some cases, by using a credit card.
Understandably, you will pay a little more for the shopping through Equated Monthly Instalments (EMIs).
This is because credit card purchases attract something called Annual Percentage Rate (APR) which works like bank interest on loans. But you are getting the latest stuff when you need it most.
3. Airport Lounge Access
A lot of credit cards nowadays offer free access to Business and First class lounges while awaiting your flight.
This means you can relax in the comfort of an airline lounge instead of the waiting area of the airport.
This facility is available worldwide since Visa International and MasterCard, among others, have global agreements with airports and airlines for lounge access for customers.
Hence, even if you are travelling Economy class, you get free lounge access. Generally, such free lounge access will cover you and the spouse as well as children below age of 12 years.
Waiting at a Business and First class airport lounge entitles you to free beverages (including liquor where permitted), snacks and entertainment.
At some airports, you also get priority boarding of the flight, along with Business and First class passengers.
4. Loyalty Points
Most credit card members overlook this excellent benefit. Almost every credit card comes with free membership to a loyalty program.
This means, whenever you pay with the credit card, you get a certain number of points. Additionally, you earn more loyalty points for spending at merchants with whom a credit card issuer has agreements.
Loyalty points you earn by simply using the credit card to pay are useful for several things. You can exchange them for expensive freebies including shopping vouchers or expensive gifts.
You can redeem them in exchange of cash discount when making purchases.
However, loyalty points usually come with an expiry date. Unless you use them before expiry, these loyalty points go wasted.
The credit card issuer pays for these loyalty points. Hence, you end up wasting your money as well as that of the issuer.
5. Free Insurance Cover
Nowadays, almost every credit card offers you some free insurance. These are usually group insurance covers taken by the issuer for its credit card members.
Depending upon the credit card issuer and type of card, you can be covered for accidental injury or death, loss of baggage during travel and sometimes, life insurance too.
Some credit cards offer purchase protection, meaning the stuff you buy is insured against damage and theft.
If you hold a credit card or plan to avail one, find out about such complimentary insurance. Nominate a family member and keep them posted about this benefit of the credit card.
In the unfortunate event of an accident, your family members can get some vital cash assistance from the credit card issuer.
6. Cash Advances
With a credit card, you need not to worry about having any cash in hand.
In fact, your credit card also allows you to withdraw cash from ATMs. Such withdrawals attract additional charges.
However, the facility is very useful if you need to pay cash immediately at places where credit or debit cards are not accepted.
Also, it is handy when you have insufficient balance in your bank account to meet some expense.
Using the cash advance facility, you also get another benefit from the credit card. You can send money to a bank account anywhere using net banking or mobile banking facilities.
In some countries like India, you cannot send money to bank accounts abroad without prior approval from concerned authorities.
However, you can send money almost instantly to relatives and friends across India, if the need arises.
7. Making Investments
Making investments without having much bank balance or cash is a great benefit of credit cards.
How? Nowadays, Asset Management Companies (AMCs) that offer Mutual Funds accept credit cards for lump-sum purchases or Systematic Investment Plans.
Or you can buy government bonds and stocks using a credit card too.
This benefit is particularly useful when you find an attractive investment opportunity that you do not want to miss.
In such cases, you can easily overcome the cash crunch by using a credit card to make the investments.
You can always settle the amount due on your credit card during the forthcoming billing cycle and ensure you do not pay APR, which keeps your investment attractive.
8. Quick Card Replacement
Should your credit card be lost or stolen while abroad, the issuing brand like Visa International or MasterCard tries to replace one within 72 hours of reporting.
The card will be delivered at the earliest at a foreign address where you can collect it safely.
This means you need not fear being stranded in some foreign land without money.
Additionally, major credit card issuers have 24-hour helplines. They help you report a lost or stolen credit card and take requests for issuing new ones.
Once you report a card as lost or stolen, your liabilities get limited. Once the credit card issuer acknowledges your complaint and hotlists it, you can challenge and refuse to pay any expenses made fraudulently.
9. Global Acceptance
A report by London-based RBR estimates that Visa International and MasterCard each had around 38 million merchants worldwide that accept their credit cards by end of the calendar year 2018.
This figure does not include other issuers like Diners Club, Discovery, Japan Credit Bureau and others. By the year 2022, this figure is expected to cross 90 million merchants worldwide, RBR projects.
Asia is seen as the largest growing market for credit cards and includes countries like India and China.
Given these facts, your credit card will be accepted almost anywhere in the world by most businesses.
This means you need not carry cash while shopping at stores. Also, credit cards are borderless that dispense with your need to carry different currencies while travelling abroad.
10. Loans on Credit Card
Nowadays, lots of banks offer instant loans to their credit card holders that have a good spending and repayment record.
Often, such loans are approved and given within three to four days. The facility can be used by credit card holders to avail loan from other banks too.
Usually, the lending bank will ask for minimal documentation when advancing a loan on basis of your credit card.
Interest rates applicable on loans on credit card usually vary according to each bank and its policies.
However, most of these interest rates are at par with those of regular personal loans or marginally higher, which makes them more attractive.
This benefit is very useful if you need a loan in hurry and cannot find guarantors and want to avoid many hassles.
A credit card can be an excellent asset that can save you from financial worries, help with investments and overcome crises, provided you use it prudently.
Else, a credit card debt can cripple you financially and ruin your credit score. If you already have a credit card, knowing these benefits can help you get better value.
And should you plan to apply for one, ensure your spending habits will not ruin the benefits of a credit card.
How Benefits Are Decided
All credit cards offer great benefits. However, some of these benefits may vary according to the issuing bank and your level of membership.
Normally, credit cards come in four levels that can be broadly classified as Classic or entry level, Silver or those for people with medium but steady income, Gold for the affluent class such as senior executives and Platinum for those in topmost income range.
Classifications can vary from bank to bank.