BENGALURU: In an uncertain economic environment, where lay-offs and pay cuts have become the order of the day, paying for monthly bills or saving for medical emergencies or children’s education fees is certainly getting tougher. But consumers can turn to credit cards if they are responsible with spending and payments to achieve a certain financial independence.
While credit card penetration is still quite low in India, changing mindsets, cautious spendings and adoption of technology especially among millenials has led to an increased usage of credit cards, according to JP Morgan. According to CRED, a credit card bills payment platform, there are several ways in which credit cards can help in trying times.
For one, the current crisis has seen incomes fluctuate for many, and become unpredictable for many more. In such times, credit cards can become a heaven-sent instrument for balancing out lumpy income with steady needs. For example, rent, fuel, and school fees are monthly fixed expenditures. By moving these expenses to your credit card, you may be able to free up liquidity.
The company says since many credit cards come with rewards and points, this will help optimise spending. Credit cards also help by maintaining a record of financial transactions. Expenses can be tracked and monitored much better when there’s a record, accessible on demand. In a state or emergency, credit cards can come handy, helping meet urgent needs like unforeseen medical expenses.
Paying back credit card dues on time and properly is one of the easiest ways to build a good credit score, which helps build creditworthiness. Disciplined and responsible usage increases your score and helps in qualifying for bigger loans with better rates that may help support larger life goals such as starting a business or buying a vehicle or house, said the company.