How Can Credit Cards Improve Your Financial Health
With a credit card, you can reap the rewards of purchasing products and services without using your own money. A grace period is included so you don’t have to pay off your bills right away – giving peace of mind when making purchases with more time to save up funds for payment later on. Everywhere from hotels and travel expenses to everyday needs like electricity or groceries are now within reach via credit cards!
Timely payment of credit card bills can improve your credit score and increase your credit limit. Credit cards also help improve your financial health in other ways, with some of them discussed in this article.
- Improves cash flow management
A credit card with an interest-free period is a fantastic approach to controlling monthly financial flow. This period is the time frame between a credit card transaction date and its repayment due date. An interest-free term typically lasts anywhere from 18 to 55 days.
IDFC FIRST Bank Credit Cards provide interest-free cash withdrawals from ATMs until your bill’s due date. For purchases made with a credit card, an interest-free period serves as free financing up until the payback due date. You should strive to time any large-ticket purchases in the first few days of the payment cycle to maximise an interest-free period.
- Increases your credit score with timely payments
A credit score represents how well you handle debt repayment. Before approving a loan, financial organisations and banks check your credit score. The likelihood of obtaining credit increases with a higher credit score. The credit score criteria include debt, payment history, number, kind, and length of loan accounts owned and current credit utilisation.
A better credit score not only makes it easier to secure loans faster but also more affordable. You can have increased negotiating power to get the best credit card in India when you have a higher credit score.
- Builds credibility
For those looking to purchase a home, pay for college or acquire a car, obtaining credit or a loan can prove instrumental in achieving their goals. However, it is important to keep an eye on one’s credit score when applying for any financial assistance. A great credit record grants the borrower more favourable loan options and quicker authorisations than if their scores were lower. Using your credit card responsibly helps enhance your credibility as a borrower.
- Lowers your credit utilisation ratio
You can raise your credit score by keeping your credit card balance below 30%. A low credit usage ratio indicates you rarely need credit, which is a positive factor in your credit score.
- Prepares you for emergencies
One advantage of using a credit card is that it allows customers to make purchases without using their own money. As a result, if you have less money saved up, you can use a credit card to fund emergencies. For instance, travel credit cards can offer a lot of savings for those who need to travel often. Similarly, people who spend a lot on gasoline can use fuel credit cards.
Good credit is essential for financial wellbeing. Banks and lenders factor it in when determining whether or not to approve a loan or credit card request – so maintain that score!