Before you apply for a card, it is important to know if you really need a credit card. These are beneficial products when used in a responsible manner. Here are four reasons that may help you determine if you need a credit card.

1. Build credit score

You are able to improve your credit score by paying your bills in a timely manner. If you do not have any loans, you may avail of a card to build a credit history. However, it is imperative you pay the entire balance in full each month. A higher credit score helps you qualify for other facilities, such as a car or home loan and avail a competitive rate of interest.

2. Meet emergencies

It is important that you save money to create an emergency fund. It must at least be sufficient to meet your expenses for three to six months. However, there might be certain emergencies where this fund may be inadequate. In such situations, a credit card may be handy and help you meet emergency fund requirements.

3. Save on certain purchases

Several stores offer special discounts when you pay with a card. Some cards offer cash back on certain types of expenses, such as movies and dining. You may also receive special offers on payment of utility bills or on your fuel spending when paid using a card. You may also be able to avail of special card offers on your online purchases. It is recommended that you consider your annual spending on such purchases to determine your potential to know whether you really need a card.

4. Earn reward points

Certain types of credit cards allow you to accumulate rewards points each time you swipe it for making a purchase. Over a period, you are able to accumulate a good balance. This may be used to avail special redemption offers, such as mobile recharge, air tickets, and others.

A card may be useful in several instances. However, it is crucial you avoid overspending on the same. You must ensure you do not build up too much outstanding on the card because it may actually be detrimental to your credit score. Furthermore, you must never carry a balance on your card by paying only the minimum dues. This will affect your credit in a negative way. In addition, you will have to pay higher finance charges on the outstanding amount.

Do you need a credit card?

Credit cards are suited to certain types of people. While considering the pros and cons, you may like to look at the following factors to help decide if a credit card is right for you.

A credit card may suit you if you

• • • Are at least 18 years of age
    • Have a regular source of income
    • Regularly pay your bills on time
    • Want to keep certain transactions separate from your everyday bank account
    • Are keen to earn rewards for your spending

A credit card may not suit you if you

• • • Don’t meet the age
    • Often struggle to pay bills on time
    • Don’t have a regular source of income
    • Can’t afford annual fees or interest charges
    • Have bad credit
    • Are happy to just use a debit card

Advantages and Disadvantages of Credit Cards

The following image shows the Advantages and Disadvantages of Credit Cards

Credit card advantages and disadvantages

Related Articles:

List of Articles About Loans, Debt, Credit Cards, CIBIL Report

• Withdraw money using credit card from ATM: How to, Charges
• Paying Credit Card Bill, Understanding statement,Paying Just Minimum
• What happens when credit card is swiped?
• Credit Card Fees and Charges
• MDR and Using Debit and Credit Cards at Petrol Pumps

If you’re thinking about getting a credit card, it’s important to consider the benefits and disadvantages they offer based on your own circumstances. Responsible use of a card is important to avoid falling into a debt trap. Apply for one today and enjoy your freedom responsibly.