Advantages and Disadvantages of Credit Cards in India

By OneCard   |   November 15, 2023

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Advantages and Disadvantages of Credit Cards in India

Financial freedom is where convenience, security, and boundless opportunities seamlessly converge.
With the right credit card, you can say goodbye to cash hassles, and say hello to rewards, a solid credit history, and more. Read on to know more.


Benefits of Using Credit Cards

1: Convenience and Security

Credit cards provide a convenient and secure way of making transactions. First off, you no longer need to carry cash, so there’s no risk of theft or loss. Moreover, credit cards can be used for making online purchases, booking flights, paying bills, and shopping at your convenience. OneCard ensures the safety of your transactions with robust security measures that safeguard your card from unauthorised usage and fraudulent activities. You can control all the aspects of your OneCard right from the mobile app.

2: Building a Strong Credit History

A credit card can be a powerful tool for building a strong credit history. By using your card responsibly and making timely repayments, you can build a good credit score that demonstrates your creditworthiness to lenders. This can help in securing low interest loans or other credit products in the future. OneCard provides a transparent and efficient credit card platform that enables you to track and manage your expenses, ensuring you stay on top of your payments and maintain a positive credit score.

3: Rewards and Cashback

Credit cards offer another enticing benefit: rewards and cashback programs. With these programs, credit card users can enjoy additional savings on their everyday expenses. Reward programs associated with credit cards let you earn points for each transaction that can be redeemed for a variety of rewards, such as discounts, vouchers, merchandise, or even travel-related perks like free flights or hotel stays.

Additionally, programs like OneRewards provide a terrific opportunity to earn rewards on most of your spends, particularly the top two categories you spend on regularly. Using reward points effectively reduces overall expenses. Whether you’re dining out or ordering in, shopping online or in-store, making travel-related bookings, or fuelling up your vehicles, credit cards with robust rewards programs ensure you get the most out of your spending.

4: EMI and Interest-Free Period

One of the key advantages of credit cards is the availability of Equated Monthly Instalments (EMIs) and interest-free periods. OneCard offers flexible EMI options, allowing you to convert large purchases into manageable instalments. Additionally, you can benefit from an interest-free period, enabling you to make purchases without incurring any interest charges if the outstanding amount is paid before the due date.

5: Source of Emergency Funds

During unforeseen circumstances or emergencies, credit cards can serve as a valuable financial backup. For example, you can use the cash advance feature if you need urgent cash in times of fund shortages.

6: Contactless Payments and Swipe To Pay

With the rise of digitalisation, credit cards have evolved to offer contactless payment options, providing a seamless payment experience. OneCard allows you to make payments by simply tapping your card at the point-of-sale terminals. If you are paying digitally, you can simply use the Swipe To Pay feature instead of waiting for an OTP.

7: Global Acceptance and Travel Benefits

Credit cards offer the advantage of global acceptance, making them a convenient payment method while travelling. Whether you’re booking flights, accommodations, or shopping abroad, credit cards provide a hassle-free way to make payments in different currencies. Additionally, premium credit cards, like OneCard, offer travel benefits such as a modest 1%* markup on Forex and offers on top travel brands. These perks really can turn up the elation of vacation for you.

ALSO READ:​Top Credit Cards in India: Know Features & Benefits

Possible Disadvantages of Credit Cards with Solutions

1. High APR

Credit cards come with an APR (Annual Percentage Rate), which can cause high interest accumulation if the balance is not paid in full each month.

Solution: Pay your credit card balance in full every month to avoid accruing hefty interest.

2. Tendency to Overspend

Credit cards can encourage impulse buying and overspending since they may not feel like real money at the time of purchase.

Solution: Create a budget and exercise self-discipline to avoid unnecessary purchases.

3. Debt accumulation

If not managed responsibly, credit card usage may lead to debt, making it challenging to pay off the balance.

Solution: Use credit cards responsibly, keep track of your spending, and spend only if you can repay the amount on time.

4. High Annual fees

Some credit cards charge high annual fees, which can add to the overall cost of using them.

Solution: Look for credit cards with no annual fees or analyse the benefits offered to determine if the fees are justified.

5. Risk to your credit score:

Solution: Make timely payments and keep your credit utilisation ratio low to maintain a healthy credit score.

ALSO READ: What Is The Impact Of Missing Credit Card Payments

6. Security risks:

If proper precautions are not taken, you may fall victim to credit card fraud or identity theft, especially when making online purchases.

Solution: Protect your credit card information by shopping on secure websites and regularly monitoring your statements for any unauthorised transactions.

7. Limited acceptance:

While credit card usage is increasing in India, not all merchants might accept them, especially small businesses.

Solution: Use alternative payment methods, such as cash or a debit card, for shopping at places where credit cards might not be accepted.

8. Additional fees or penalties:

Some credit cards may have fees that you might not be aware of in the beginning. These include fees such as balance transfer fees or cash advance fees, and penalties for making late payments or exceeding the credit limit.

Solution: Read the credit card agreement carefully and be aware of all potential fees and penalties to avoid last minute surprises.

ALSO READ: How to Avoid Credit Card Late Payment Charges?

Remember, while credit cards offer convenience and benefits, it’s important to use them responsibly and understand their potential drawbacks to avoid financial difficulties.

Conclusion

Credit cards have become an integral part of the modern lifestyle, providing us with convenience, security, and a range of benefits. OneCard stands at the forefront of credit card solutions in India, offering users an array of advantages that empower their financial journey. From building a good credit history to enjoying rewards and cashback, OneCard ensures a seamless and rewarding credit card experience. Embrace the advantages of credit cards and unlock unparalleled financial flexibility in India.


**Disclaimer: The information provided in this webpage does not, and is not intended to, constitute any kind of advice; instead, all the information available here is for general informational purposes only. FPL Technologies Private Limited and the author shall not be responsible for any direct/indirect/damages/loss incurred by the reader for making any decision based on the contents and information. Please consult your advisor before making any decision.