Carrying cash in your wallet is not only troublesome, but it can be stolen, by miscreants. Debit cards are better, but month-end liquidity crunches mean that your debit card becomes pretty useless when bank balance is just ₹100. This is why credit cards are a boon when it comes to comfort and convenience. Not only do they allow you to spend strictly as per your control, you also get a host of benefits with the right credit card. Let us see how credit cards score over cash and debit cards.
Both cash and debit cards have a major limitation. You can only spend as much as you have. Reena, a software engineer, faces this trouble. Like most people, Reena too faces the conundrum of having nearly zero balance in her bank account, by the end of the month. Not only does she lack cash, her debit card will be of no help till the time Reena’s bank account gets a refill i.e. month’s salary. A credit card is a lifesaver in those situations as Reena’s younger sister Meena explained. For instance, SBI Simply Save card gives Meena an interest-free credit period of 20-50 days if her previous month’s outstanding balance is paid. So, like Meena, anybody can easily spend money and also enjoy a zero-interest option.
Most of us have been in a situation where you require short term loans, where you end up asking your parents, your friends or colleagues for a loan, which you know you can pay back within a week’s time.
At the end of the financial year, such short-term money deficits are common. Pradeep needed ₹11,000 to pay off his annual medical premium and also claim tax benefit before the end of March. Nobody could help because everybody needed cash. Pradeep’s salary is in by 5th every month but there was no one who would give him the money on 28th. So, he used his SBI Simply Save credit card and got a cash advance. The card has a cash advance limit of up to 80% of credit limit, with a maximum of ₹12,000 per day. By 5th when Pradeep got his salary, he repaid the entire money plus meagre interest. In any other loan, he would have to pay high interest.
When you pay your grocer with cash, he just smiles at you if he is a good mood! With a debit card too there are hardly any extra benefits. But a credit card rewards you every time you spend. Good credit card companies offer a whole hamper of goodies, which get triggered every time you spend. For instance, SBI Simply Save Card gives your 2,000 bonus Reward Points if you spend ₹2,000 or more in first 60 days. The reward points can be used later to buy new things or avail great offers. That’s not all. Every time you spend Rs 100 on Dining, Movies, Departmental Stores and Grocery Spends, you collect 10 Reward Points. So, if you spend ₹5,000 on these avenues, SBI Simply Save Card will give a whopping 500 reward points. On all your other spends, you can earn 1 Reward Point per ₹ 100 spent i.e. 4 Reward Points = ₹1. These reward points when redeemed can be worth tens of thousands of real money with which you can buy apparel, jewellery, electronic appliances and much more.
Vehicle owners have a general predicament of a shortage of cash at petrol pumps. Every time you fill up the tank, you need to go to the ATM and withdraw cash. In the case of a debit card, you can play by plastic but even if you buy 25 litres of fuel, there is no discount. However, smart credit cards can save you money. Instead of keeping cash in a bank account, Shruti uses her SBI Simply Save Card and enjoys complete fuel freedom. With her credit card, she doesn’t have to pay the 1% fuel surcharge at any petrol pump. Whenever her fuel bill amount is between ₹500 to ₹3,000 at any petrol pump in India, Shruti pays no surcharge.
There is a general thought that your credit card doesn’t facilitate savings and you always end up spending more that you have. This is not the case. With the right credit card, your expenses can also be rewarding.
Sameer found out that his annual membership fees of his SBI Save card was reversed when he used his card to pay for his home appliances. He also found out that he can get reward points on his card, which can be later used for other transactions. If he accumulated points over a period of 5 years, he could very well upgrade his appliances or surprise his wife with a Swarovski set.