13 Reasons Why I Prefer Credit Cards

credit card

You achieve Financial Literacy by smartly using financial tools. Credit Cards are no different, once you understand their full potential it is easy to include them as part of your financial habits. So today we will be highlighting 13 benefits that these cards offer and how we can use them.

So, What are these excellent benefits that make Credit Cards great?

  1. No Physical Cash
  2. Sign up Bonuses (a.k.a. Welcome Money)
  3. Reward points & Cash Back
  4. Frequent-Flyer Miles
  5. Convenience of Use
  6. Enjoying Grace Period
  7. Protection on No-Return Items
  8. Extended Warranties
  9. Fraud And Theft Protection:
  10. VIP and Exclusive Access
  11. Insurance
  12. For Emergency Loans
  13. Build Credit Score

I have tried not to suggest any specific Cards as most of them do provide all the mentioned features(with some different variation). Now let up directly dive into understanding what they are and what they offer:

No Physical Cash

Eliminating the need for carrying physical cash is the most immediate advantage of using a plastic card. Having at least one single card in your wallet means less frequent visits to the bank or ATM, counting out change, or scribbling in a checkbook for a big purchase. If you have already been doing with a debit card, you already understand what I mean. People say time is money and saving time on those ATM visits could be your first step to think like them.

Although in India, not all merchants offer payment through card services and you might need to keep some change along, but you need not worry. Things are changing fast, and the accepting card payments are indeed on the rise. Paying primarily using a plastic card, and carrying limited cash helps you develop a habit of neither running out of money nor keeping too much cash along with you.

Sign up Bonuses (a.k.a. Welcome Money)

Sign-up bonuses are lucrative incentives card companies offer for customers attraction. While primary incentives include duplicate cash backs or travel air miles on regular transactions, they can go as high as free nights stays or priority check-ins. Most companies do also offer to waive their first-year annual fee if you utilize the cards up to their defined certain limits. If you only buy things you were going to buy anyway, these bonuses provide an easy way to get discounts on your spending.

Requirements and earnings for sign-up bonuses always vary depending on the card you may choose. Cards with or without annual fee both could offer multiple rewards. So typically, a card with a yearly fee will have a more significant bonus than a no-fee card. It’s a good idea to take sign-up bonuses into account when selecting your credit card.

Reward points & Cash Back

Cashback’s are the fixed percentage discounts provided on particular type of purchases made through the card. These could be a movie ticket or paying out your bills. Not all transaction might qualify for this, but these small rebates are your issuer’s greetings for choosing their product. Example be the Citibank credit card giving 5% cash back on movie tickets, telephone and utility bills, and 0.5% for all other transactions.

Reward Points are similar to cash backs but only to redeem different prizes and services from those points. While cash back can be used to pay off charges from your credit card statement, reward points can only be used to purchase new products on a discounted price. Reward points received in the form of air miles are redeemed just over air travel.
HDFC Bank AllMiles Credit Card currently offers 3 Reward Points for every Rs. 150 you spend on travel. If you are a frequent flyer, you can accumulate these points over various trips and redeem them for next air miles.

Often people start running behind rewards and hike up their expenses which is always wrong. However, by even using cards correctly, rewards points can earn you much money over time. When opting to start using a card, one should look for their major monthly purchases, and then purchase the credit card according. Some cards offer more magnificent reward points on groceries, while some focus on travel or dining.

Frequent-Flyer Miles or Credit Card Miles

If you are a frequent traveler and you have a credit card, you certainly need to get involved in the miles universe. Companies award miles upon sign-up and again with every purchase. These miles are similar to reward points that you earn on travel expenses but can redeem for free airfare, hotel stays, or other travel expenses only.
Credit Card companies usually tie up with airline agencies to provide you with these bonus points which are generally more than regular reward points.


In India, If you pay cash for everything, you have to make sure you always have enough money with you. That could mean repeatedly stopping at the bank multiple times a month to replenish your funds or carry an abundance of money all the time, which is primarily not a good idea when you are a road. Not to mention you also have to hassle for change. With credit cards, you can let go of these two things and focus on far better things.

Enjoying Grace Period

Credit cards usually work through a billing cycle and are to be paid after the billing cycle is over. It is a kind of free credit or loan that banks offers you before charging any interest on your expenses until the billing due date. You do not pay any interest if you keep paying bill payments as full at the end of the billing cycle. Why would banks do that? To grow customer base and reduce advertisement and marketing cost. If you need any loan (car, home or any other) in future, you are most likely going to use the same bank that you have a good history with.

In contrary to a debit card purchase where your money is gone right away and you cant use more than what’s in your account, with credit cards purchases you can outreach your bank balance.

Protection on No-Return Items

Another significant benefit of using credit people forget is the fact you get so many consumer protections with these individual cards.

Most credit cards automatically come with a fluidity of consumer protections and provide insurance on items purchased through them. They also account for merchant fraud protection. If you pay in cash and the merchant does not come through, it’s too hard to get back your money. However, with credit cards, you can raise a dispute over the transaction, which allows your company to freeze the trade. All the hustle or investigation to resolve the conflict is then handles by the company, which otherwise would have cost you additional money and time of your own. It is easy to get back your money once the dispute solves in your favor.

Some stores don’t allow returns or specific items as non-refundable. So if you buy any product from there and are not satisfied, these cards come in handy and help you.

Most rewards cards also offer zero fraud liability for starters, so if someone uses your card or card numbers to make any fraudulent purchase, you can still notify the customer care and do not have to pay anything.

Extended Warranties

Selective cards offer extended warranties on the items you buy. They can also include purchase protection and guaranteed returns outside the manufacturer window.

The best travel credit cards come with travel-related benefits such as trip cancellation or auto rental coverage, or travel accident insurance. When travel booking sites are asking you for additional cost for these services, you can easily say no and rely on your card company.

Fraud or Theft Protection:

Most credit cards automatically come with a fluidity of consumer protections and provide insurance on items purchased through them. It also counts for a merchant fraud protection. While there’s only a small or no chance of having lost or stolen cash returned, you can quickly cancel your credit card if you lose your wallet. Most financial institutions keep best security processes to protect you if your card has been lost or stolen, you only need to contact your bank to report the issue as soon as possible. Since most credit cards offer a zero liability policy, you might have to pay for your duplicate card once notified.

VIP and Exclusive Entertainment Access

Selective cards offer special events and access exclusively for their cardmembers. Not only you will be provided access to presales and preferred seating across various events, but they can also go on providing you additional complimentary membership to Airport Lounges. This helps in enriching your experiences at no or very less cost.


All the Cards offer you some level of coverage against various risks for your usages, Like having free travel insurance or accidental insurance, or Emergency Overseas Hospitalization issuance against any medical emergency when you are traveling. Like in case of death in an Air accident, your nominated kin could be entitled to compensation.

Issuers do restrict these insurances across multiple policies so you should be well aware of them to claim your coverages.

Emergency Loans

Even though credit cards allow you to make a much higher purchase than money present in your saving account, they additionally offer the best help in case of medical emergencies or instance loans required. It is always good to have emergency funds saved, but it may depend on person to person how liquid those are and how readily they are available. These cards allow you to pay for emergencies at a moments notice and then generate those funds in due course.

Although if one can’t generate all the fund amount, it is the timely availability of money that is a value here. This fund does come at a significant cost of High Rate of Interest that banks demand if total dues are not covered.

Build Credit Score

What is Credit Score? Your Credit Score or Cibil score is more or less a grade of how you manage your credit (same as FICO score outside India). From Late Payments to Cash advances, anything that looks most attractive about credit cards inversely affects your credit score. Your repayment history counts for 30-35% of your Cibil, and thus one single mistake counts too much. As you know all banks visit your cibil score before providing you with any loan, a dent in your score can affect you for a long term. This is far more hazardous than paying interest or fee.

Using your card efficiently builds up your credit score (aka banks ability to trust you). Use of these cards and proper re-payment of bills improve your credit score and explains how good you are at handling credit. Having a high credit score allows banks to go straight and lend you higher (amount) loans at much favorable interest rates. A low credit score always raises suspicion, causing banks to be less reluctant to give money or demand rate of interest on repayment.

Using a card responsibly always helps you improve your credit score. All card companies report your payment activity to the credit bureaus. Debit card use doesn’t appear anywhere on your credit report, so it can’t help you build or improve your credit.

Can one build a credit score though debit cards? Absolutely NO! Debit Cards and Credit Cards work on different principles. With first, you are using your own money kept with banks, while with latter you are using banks money in advance.

Now, do you think you are ready to start using your first credit card?


Additional rewards

0% balance transfer card

Sometimes even after being responsible for their financial, people can end up collecting too much debt and are forced to pay those massive credit card dues. Here, A Credit Card balance transfer could be precisely what you need to get you out of that burden. This feature allows you to transfer your outstanding Credit Card dues from your current insurer to another at a lower rate of interest. This makes it cheaper for you to pay back the outstanding amount.

Additionally, Certain Banks usually provide a buffer period to new cardholders who opt for these balance transfers. This buffer period allows them to clear all outstanding dues either at zero or extremely low-interest rates.

Banks usually offer balance transfers only on Credit that others have provided. Also, do make sure you check buffer period and low-interest period on the new card. And be sure to repay all your outstanding debt before interest rates hike up, else you might end up paying more.


Monthly Budgeting or Expense Tracking

Most of the card companies help you to organize your monthly expenses. With smartphone apps like Walnut and Mint which keeps track of your expenses, paying a monthly bill as a gross is a good habit. Summary of monthly expenses allows efficiently planning your monthly budgets and short/long-term goals.

If you do not want to use those apps, you do not hassle with storing receipts. Track your expenses using an online statement as a backup. You will be able to find you old billing statements even after 5-7 years.


Now I would like to hear from you. Do you think using credit cards makes a great sense?

What are major challenge have you seen people struggling with using credit cards. Or maybe you have a question related to them, and please leave a quick comment right below.