When the salary arrives, it’s time to budget. Yet, Sachin’s salary does not seem to include all the things that were required based on his lifestyle. Rather than looking at a bleak outlook at the end of the month, he ensured he had a credit card to facilitate his monthly needs. After successfully receiving his credit card, his monthly budget looks better with the convenience of a credit card at hand.
With mounting bills at the end of the month, Sachin’s credit card bailed him out of a lot of critical payments. The traditional notion of impending debt arising from a credit card is slowly changing. The credit card has moved beyond being the bearer of impending debt but it is slowly transforming into a debt-releaser.
Yes, it’s true; a credit card can open a lot of doors. The common belief that a credit card displaces our monthly budget considerably is slowly being dispelled. With a credit card in hand, your monthly budget can take a breather and perhaps open-up financial avenues for you. Whether you are single or in a family with dependents, the convenience of having a credit card in your wallet impacts all.
Future events in Present ‘Play’
It’s obvious that while budgeting, purchases are postponed for the future as we cannot accommodate them in the present. A credit card does more than enhance possibilities of per-planning such purchases to the present, it ensures that one can live life the way one is expected to.
Freedom to live beyond budgets – With a Credit Card in hand
Banks and financial institutions offer credit cards to access a variety of credit facilities. With a credit card in-hand, one can access a variety of credit facilities suited to their lifestyle. When it comes to credit card facilities, the world of altering one’s lifestyle based on the budgeted amount has stopped. Extending the possibility of credit facilities for every kind of purchase, the credit card is slowly becoming dearer to the common man due to the following reasons:
- Unlocking freedom: Credit cards are accepted by practically every retail outlet selling everything from medical supplies to retail clothing or any other type of purchase. This facility of credit offered by the use of a credit card gives a considerable leverage while budgeting. Considering some purchases that are extraneous to the budget with the help of the credit card is the amount of freedom that one can access.
- An asset during emergencies: No matter how much we plan, there are certain aspects of our budget that cannot include emergencies. It is at these times that the credit card comes handy. Imagine having an emergency when the funds run out at the end of the month. It’s too late to go knocking on people’s doors for loans and advances; yet one ready reckoner is the credit card within your wallet.
- Controlling your budget and lifestyle: If you thought that the credit card has a tendency to spiral your purchases to another dimension, then don’t fester over it, as it’s possible to control. No matter how convenient deferred payments are with a credit card, it’s always good to remind one of the impending interest rates and penalties involved. Being ignorant of these facts can put a deeper hole in your budget in future. Although, the convenience of the credit card is to defer the payments, but one has to ultimately pay it in full or in installments.
Opting for a credit card at the opportune time before you begin budgeting for the month, quarter or the year always makes sense. Take a look at the most attractive offers for credit cards that allow you to link payments, offer flexible re-payments options and does not impose unreasonable penalties on you. Finally, with credit card in hand, you can easily access the best of your lifestyle without worrying much about overstepping your budget and compromising on your lifestyle.
————-
(Anupama Sughosh is widely followed for her personal finance and banking blogs pertaining to the Indian financial sector. With a prior experience in the banking sector, she has used her experience of six years with top Indian and international banks such as HSBC & ICICI Bank to advice consumers on personal finance. She is widely followed in some of the top financial magazines with citations in online financial websites.)
Article is good and same time confused also.
Requesting Author to clarify the following things.
“With mounting bills at the end of the month, Sachin’s credit card bailed him out of a lot of critical payments.” How a credit card has bailed out Sachin from mounting bills at the end of the month? Without paying anything extra ?
Take a look at the most attractive offers for credit cards that allow you to link payments, offer flexible re-payments options and does not impose unreasonable penalties on you. –
Here Author has given one sided information. When bank offer flexible re-payment options, then theses option are not coming with FREE. Customer has to pay 1 to 1.5% interest per month or 12-24-36% interest from the day of purchase, which is naturally on higher side.
The very important information of high interest rates and credit card is a two sided sword is missing in this article.
Best Benefit of the credit card is –
To purchase/use of card the very next day of statement date, then you have 40-50 days of credit period depending upon your card.
To pay for online purchases like rail tickets, etc
To use the card so that cash is not required to handle.
To earn reward points by paying various utilities bill and conversion of point into gift articles by banks.
To have only one card so that customer will not get trapped into multi credit card payment and trapping of paying interest on one or another card.
Benefit of only one card so that reward point accumulated at one card only.
To use card by looking into our paying capacity. I am using only one card , which is now having over 9000 points.
I am requesting TAXGURU to publish the article which can give reader both the side information +ve and -ve, which this article is lagging behind.
May be author is with international banks, article is for the benefit of banks or may be wrong article has been came here.
Please don’t publish this kind of article.
Regards
One more word of caution. In case you choose not to pay certain amount to your credit card company, of course for a valid reason, that company continues to show your balance as default, instead of settling amicably. Consequently, your credit rating will reduce in the records of CIBIL, a site which is compulsorily referred by scheduled banks at the time of sanctioning loans. The balance amount will become a stumbling block in your efforts to raise a loan(either Housing or Vehicle Loan) and you will be constrained to clear it off. Please, therefore, spend wisely and certainly within your means.
As indicated in this article, one has to remember that credit card amounts have to be paid, either deferred or on due date. Credit card is like a match-stick; it can light a candle or burn your finger too, if not handled properly. Interest charges are the highest. It is always preferable to have an Overdraft Limit with your bank and use it carefully, than resort to the EMIs offered by credit card companies. One principle to remember is never take a credit card for shopping. Instead, carry your debit card, which is capable of curbing your urge to splurge.
Dear Anupama,
First of all thank you for such a nice post.
I am Shayak Ghosh and I’am Salaried employee. Though you in your blog have mentioned that Credit Card can solve many problems but I am still in dilemma whether to go for it or not as I have heard the credit card providers some time put undue/untrue charges in your bill which we remain simply unaware of and could not just per-calculate as at the end of the day one have to have a budget even for paying once credit card bill. Most importantly how can I rearrange my budget when I get an extra expense to incur i.e. the Credit Card Bill itself?
Article is good but note of caution is required. Two aspects are to be noted accurately for peaceful existance and not to land in problems. 1) Credit is to availed through the card only to an extent that you have ACTUALLY EARNED THAT amount but still to receive. 2) Credit you want to avail hopeing YOU WILL EARN. When credit card is used judicaiously, it is boon. It will be a boon if you use to the extent (1) above. But in view of the sweet offers and temptations to avail, if we avail the credit facility it will be a ‘noose’! Credit card is an asset if we know how to use it and limit it’s use. The penal interest for defaulting to pay is, though they say, 2%, it actually is 24% per annum.
I completely disagree with this article. it allows you to go beyond the limits of your affordability. at the end of the day its you who has to pay the bill. credit card gives you flexibility to defer the payment.
when your recurring salary comes you should be in position to plan your budgets. just swiping cc will take your all happiness. we should think as a big picture and the facts.
Please don’t publish this kind of article.
for me credit card means;
1. Any discounts – via points etc..
2.In case of emergency
Thanks
CA Nishant