The controversial Plastic Card (Part 01)

 As soon as some people hear the word ‘Credit Card’, they end up projecting the user as ‘Spendthrift’, ‘Financially Undisciplined’, ‘Payment Defaulter’ and so on. However, for a person who knows the basic guidelines of a credit card’s usage, they would be proudly using it.

A credit card is a two-edged sword and must be used prudently. For the population who think a credit card is a debt trap, must be clear, using it in the right manner the user can not only be solvent but also rewarded.

What is this Credit Card?

A credit card is a type of lending provided by a bank or a similar financial institution to its customers as a reserve for their day-to-day expenses termed as ‘Credit Card Limit’. This reserve is fixed depending on several criteria. The credit card can always come within reach when a person is temporarily financially broke. Some card users think the credit limit is their own money, but on the contrary, it is the bank’s money that is used by the cardholder as it is a lending product by the bank in the form of a plastic card.

A credit card is categorized under an ‘Unsecured Lending’, where the borrower does not have to mortgage any of its personal belongings. Unlike a ‘Secured Loan’, where the borrower has to mortgage an asset like property for a home loan or a vehicle for a vehicle loan.

I have sufficient cash to pay, why should I take up a Credit Card?

“Then you are the perfect prospect for a credit card”. If an individual has sufficient funds to pay off the card as and when demanded by the card issuer in other words – has used the card well within its income sources, then credit cards are a perfect gift for themselves. As they would not only be benefitted from some rewards, but also enjoy the time until the bank asks to pay it off. Apart from these temporary benefits, should a user maintain his/her card(s) most healthily – by not missing even a single payment, their credit score remains top-notch with the credit bureaus. Better the credit score, the higher the chances of getting further borrowings with any financial institution in the future (even apply for a home loan). This Credit score is extremely imperative in determining the creditworthiness of an individual. Besides all, the card can always come in handy during harsh rainy days.

Perish the thought, should there be an uninvited expense like hospitalization; the patient/relative has run out of liquid funds and the patient is not covered in cash-less health insurance. This is when the credit card could land as a parachute as the hospital bill would be paid and hopefully, the patient could be back home & on the path of recovery. The patient/relative can then repay the credit card bill according to the date the bank demands or claim the insurance and then repay the card (whichever appears and realizes earlier).

Culmination

So, whether an individual is a spendthrift or a miser, a credit card could always come in handy.

Did you know you can fly free of cost and stay in those luxurious star hotels at no cost at the helm of credit cards? Stay connected to know how...

Do express your opinions below in the comments section.

PS: The above information has been penned down by me from my experiences of not only being a credit card user but also in the form of a former employee of a private and an international bank.