If you are careful enough, credits can become a valuable ally to your financial management efforts. It can improve your finances, increase your purchasing power, and even save money on specific banking commitments. It's safe to say that maintaining a good bank report and credit score can significantly improve your financial health.
Much like all good things, however, financial credit comes with a handful of conditions for its responsible use, and any failure in adhering to them can attract penalties. Credit can be of four type: service credit, charge cards, installment credit, and revolving credit.
Before you opt for credits, you must consider their pros and cons and how they can benefit your financial record.
You can realise the true potential of such benefits when you plan to apply for long-term financial loans, such as automobile loans, housing loans, education loans, or even personal loans for bad credit. Like the loans, credit can help you save much of your interests if you are due for mortgage payments.
Before you opt for credits, you must consider their pros and cons and how they can benefit your financial record.
Exemption on Interest and Fees
The biggest boon from excellent credit is the opportunity to save money at unexpected places. One such instance is when you are applying for payday loans UK or paying monthly mortgage dues. With superior credit, you can receive an exemption from hefty interests and fee payments.You can realise the true potential of such benefits when you plan to apply for long-term financial loans, such as automobile loans, housing loans, education loans, or even personal loans for bad credit. Like the loans, credit can help you save much of your interests if you are due for mortgage payments.
Furthermore, it can influence whether you qualify to purchase previously affordably assets.
Repaying your credit card bills on time boosts your reliability, and thus, your credit score, making the process of availing credit in the future much easier. Additionally, you can also benefit from lower interest rates on future loans.
If you do not meet their benchmarks, however, you will have to cough up cash instead. Upfront cash deposits with shifting costs can often be burdensome, and thus, highly undesirable.
You can also receive credit points that can be used to reduce the final due amount on your credit card statement. Lastly, some premium credit cards even offer flight and hotel stay expenses.
However, to qualify for a credit card, you must have a healthy credit score and a reliable financial record. You'll also need to find the right card to start receiving the benefits that work for you.
Most people are unable to cater to emergencies due to their limited savings. Under such circumstances, credit can often be a lifesaver. With credit as your backup plan, you can access more financial resources through credit cards, other lines of credit and borrowing options.
This can lead to a sticky situation, especially if all of your hard-earned money is stolen and you're left with nothing to pay your EMIs, mortgage dues, food, and all other essentials. Furthermore, retrieving this stolen money can often be a lengthy and draining process, leaving you in a bind. On the other hand, credit cards significantly reduce the risk of such fraud and are thus a lot more desirable.
If your credit card is ever subjected to fraudulent activities, your partner bank will immediately cease all financial transactions on your name and begin tracing the money. Several banks provide a bunch of options for fraud protection, along with the benefit of zero-accountability.
How Can Credit Help You Build Your Dream Life?
Effective Cash Management
A fashionable mode of financial transaction for a long time, a credit card allows you to purchase goods without paying for them immediately. Your credit card provider credits you with a certain credit limit within which you can make any purchases. The amount taken on credit needs to be paid before a stipulated deadline, failing which attracts an additional amount as interest. However, a credit card can help you manage your finances better and more conveniently.Repaying your credit card bills on time boosts your reliability, and thus, your credit score, making the process of availing credit in the future much easier. Additionally, you can also benefit from lower interest rates on future loans.
No More Utility Deposits
In a society where most people tend to survive on monthly paychecks, utility deposits can pose a considerable challenge. Your credit history will be thoroughly reviewed when you plan to open a new cell phone account or change your house. If your score qualifies the predetermined criteria, you will be able to put your plans in motion without much hassle.If you do not meet their benchmarks, however, you will have to cough up cash instead. Upfront cash deposits with shifting costs can often be burdensome, and thus, highly undesirable.
Credit Card Rewards
While you can always use cash or a debit card to make purchases, using a credit card often comes with many beneficial rewards. These rewards or privileges can often be in the form of reward points or even cashback and can go a long way to save you money on other transactions. For instance, some credit cards reward you with points that you can redeem at petrol stations, while others give you offers at movie theatres or restaurants.You can also receive credit points that can be used to reduce the final due amount on your credit card statement. Lastly, some premium credit cards even offer flight and hotel stay expenses.
However, to qualify for a credit card, you must have a healthy credit score and a reliable financial record. You'll also need to find the right card to start receiving the benefits that work for you.
Emergency Back-Up
We live in an era in which inflation has made the process of saving money a lot more challenging, alongside paying for one's necessities. However, you can steer your way through these financial challenges if you have an eye for controlled spending, while also setting up an emergency backup.Most people are unable to cater to emergencies due to their limited savings. Under such circumstances, credit can often be a lifesaver. With credit as your backup plan, you can access more financial resources through credit cards, other lines of credit and borrowing options.
Guard Against Fraud
Credit cards have immensely contributed to the reduction of financial frauds in recent times. On the other hand, the use of a debit card often comes with its risks, as people have often been victim to financial crimes that have led to their banking details being compromised.This can lead to a sticky situation, especially if all of your hard-earned money is stolen and you're left with nothing to pay your EMIs, mortgage dues, food, and all other essentials. Furthermore, retrieving this stolen money can often be a lengthy and draining process, leaving you in a bind. On the other hand, credit cards significantly reduce the risk of such fraud and are thus a lot more desirable.
If your credit card is ever subjected to fraudulent activities, your partner bank will immediately cease all financial transactions on your name and begin tracing the money. Several banks provide a bunch of options for fraud protection, along with the benefit of zero-accountability.
Insurance Coverage
Several banks and financial institutions provide you with an insurance cover on your purchases, regardless of the type or price of the commodity in question. While the rest of the world scrambles for guarantees and warranty periods, you can entirely depend on the likes of extended warranty coverage, purchase protection, price change protection, and other benefits that come with credit cards. The insurance returns are even better with travel expenses. You can expect rental car insurance benefits, lost baggage insurances, trip delay or accident compensations, and other exclusive support, which can otherwise cost a lot.In Conclusion
Credit can help you save plenty of money, both in the short and long-term. However, if managed carelessly, it can become a liability. If you aren't satisfied with your credit score, you do not need to worry. There are several ways through which you can improve it and enjoy the benefits that come with.
Tags:
Business