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Credit Cards - Boon or Bane?

There are people who love splurging, thanks to credit card.

There are people who avoid credit card like plague, due to fear of overspending or online frauds?

There are people who love credit cards due to rewards they offer.

Which category do you belong to?

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Credit cards can be an amazing tool to manage your finances. Sure, the savings may not be huge if you don't spend much, but then, you can always enjoy those extra rewards that come along side.

Few ways this is possible:

1. All credit cards have a rewards system associated with it. Regular use of credit cards can help you accumulate points and later on redeem it for anything ranging from a pen drive to shopping vouchers to flight tickets to vacations.

2. Most credit card usually offer up to 48-50 days of credit period. Assuming that you pay 3 days before the due date, for a purchase made in any monthly cycle you can usually get 15-45 days of time to pay it off. Averaging this over long term, this is interest free money you are getting for this credit period. So effectively, if you spend Rs. 10,000 a month, over the year you get an equivalent of 1 month interest on Rs. 120,000. This may not be a huge amount., but can help you save!

3. Many credit cards have exclusive deals (cashback/ interest free EMIs/ Co-branded cards etc.) which don't cost any additional money.

4. Credit cards can be a handy way to keep a track of your spending which you may probably not be otherwise doing if you spend lot of cash.

5. Might be handy in case of emergency where you need some money urgently but liquidating any assets (FD/ MF etc.)  may take a day or 2.

So, if you have a good control over impulse buying & unnecessary splurging and do not use a credit card, do go for it. 
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