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Yogi Zone

Useful articles for your finance management by our team of experts

Five places to keep using Credit Cards

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Credit card usage

Credit card has been an essential part of our lives. Some see it as a mandatory tool to be in the pocket. Some opine that using credit cards is a step towards financial destruction. There is truth in both the opinions. However, let’s see some of the instances where you can continue using credit cards.

1) Medical Emergencies

They say emergencies don’t announce themselves before arriving. And it’s absolutely true when it comes to medical emergencies such as accidents, strokes and so on. Some of you might already have bought health insurance which covers expenses related to such incidents such as doctor fees, ambulance charges, room rent, etc. If not, we recommend purchasing one right away. When you do not have health insurance covered for the expenses, you may not find any other alternative for paying the bills except using the credit card.

(Also see: Everything about health insurance)

2) Clear high interest bearing loans

At times, you might have taken a personal loan when in an emergency. Interest rate on personal loans vary from 14-40% p.a. If your loan is amongst the high interest ones, consider clearing it straight away. You can use your credit card to clear this though there might be pre-payment penalty on it. However, make sure you are not paying the minimum monthly amounts on the credit card. Also check the interest rate prevailing on your loan.

3) Buy mobiles on EMI

I always had this issue. Whenever I want to buy a mobile on an EMI, the shop does not allow me to buy it using my debit card. Mobile phones can be bought on EMI only through a credit card. If you want to purchase a high end mobile and do not have funds to make lump sum payment, you can ask for an EMI option on your credit card.

(Also see: Mobile smart phone – Is it worth the price?)

4) Build credit score

We know that credit cards can be used to pay bills, EMIs, etc. But, apart from this, using a credit card also helps build your credit score. However, you must remember that you need to use your card regularly and also make regular payments. Never cross the credit limit given by the issuer. If you do, you might be treated as credit hungry customer and your credit score might take a hit.

5) To avail discounts

Credit cards are a great means to get online discounts. Credit Card companies usually have tie ups with shopping portals or brands and offer discounts for credit card holders. Many a time, you also pile up reward points upon usage of your credit card which can be redeemed elsewhere. Rewards on credit cards include cash back, fuel, flyer miles and so on.

  • chintu

    good compilation

    • Yogi Cfp

      Thank you.

  • krisham51

    using credit cards for paying personal loans is not at all advisable.Personal loans have 15% interest rates and CCs have almost 33%.ONly if you are expecting money in a few days time and can clear credit card amount in full.Still doe not make sense as instead why not wait a those few days and clear the loan itself?

    • Av Suresh

      You are right in the case you have mentioned, Krisham. However, in rare cases personal loan interest rates are 25-30% or more. In such cases, the option can be exercised. Otherwise, it is not advisable to do so.

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