What Is A Credit Card And Why Do I Need It

Posted Date: Sat Jul 2016

A credit card is widely used for different transactions in a convenient manner  by millions of people all over the world on a daily basis. Credit cards are are plastic based payment solutions. However they differ from debit cards by a simple rule. A credit card will let the cardholder make purchases with the cardholder committing to pay the amount in return at the end of the month. If the cardholder fails to clear the balance at the end of the month, then a fixed rate of interest starts accumulating on the remaining balance. When you’re using  a credit credit card you’re essentially taking a loan by borrowing money from the bank and the bank pays on your behalf to the person/entity you’re purchasing your merchandise/services from. Your spending limit or credit limit will be decided by the bank which provides you the credit card and will be based upon your previous credit history. The interest rate varies from one bank to another.

Now the question arises that do you really need a credit card or not? Following are certain scenarios that can help you determine if you need  a credit card or not? Frequent Travelling: Are you a business person? Do you frequently travel abroad for work? If yes, then you certainly need a credit card to make purchases and perform online transactions as you most likely cannot carry so much cash with yourself due to legal and safety issues. Emergency Need: Any emergency could arise when you’re short of funds such as around the end of the month or just have money but reserved for other needs?  In that case a Credit card surely comes in handy as you can use it anytime without worrying about running out of finances or facing the embarrassment of having to ask anyone else for money or loan. Online Shopping/Services: Do you wish to make purchases from e-commerce stores from the comfort of your home/office online shopping and availing different online services. Or do you use online services that have a monthly subscription or have a business for which you run ads and pay for their marketing? In all of the above cases having a credit card really helps in making such payments with ease. Buy Now, Pay Later: One of the major reasons you may wish to have a credit card is that you simply don’t need to carry cash with you and can make purchases at any point in time and can pay the bank within the allotted time period before the interest starts to accumulate on it. Above mentioned are some salient reasons why you might need a credit card. If one or multiple reasons fit your needs then you should get yourself a credit card. We have a separate guide to getting the best credit card (hyperlink how to get the best credit card article here) which you should check before you go ahead with getting one!