What is a credit card? Its Benefits and Importance in Medical Emergencies—
Are you considering getting a credit card? If so, check out this information, including what a credit card is, the advantages of obtaining one, which banks to choose from, and how to use a credit card for healthcare services.
Overview
Today, with our growing use of digital devices for business, the way we bank has completely changed. Cash: once necessary to carry around in your pocket. Now it’s simply known as “plastic money” (more specifically, a credit card) that has made life much simpler for individuals who want to conduct financial transactions without having to use a physical form of cash. So, while we may have heard a lot about credit cards, have we considered just how effective they can be in helping us build wealth and get through difficult times (i.e., emergencies like going to the doctor)? This article will provide an in-depth overview of what credit cards are, their benefits for consumers, and whether you should apply for one at a private financial institution.
Credit Card Explained.
A credit card is a means of borrowing money and spending based on a predetermined limit known as a “credit limit,” issued by your bank or financial institution. The fundamental concept behind using credit cards is “Buy Now and Pay Later.”
A monthly statement listing the amount of money borrowed will be provided by the bank. If the repayment is received during the grace period (usually 45 to 50 days), there is no interest charge on that repayment.
The Advantages of Having a Credit Card
Credit cards are not just for making purchases; several other benefits might appeal to you.
1. To Establish a Credit History
When you regularly use a credit card and pay off your bills on time, this helps create an account with CIBIL (Credit Information Bureau of India Limited) and provides your lenders with proof of how well you manage your finances and your ability to repay debt in the future. This CIBIL score will help you qualify for better rates when it comes to applying for a home or auto loan in the future.
2. To Earn Reward Points and Cash Back
Each time you make a purchase with your credit card, you will earn equal amounts of “reward points.” These reward points can be exchanged for free merchandise, airline ticket(s), or anything else specified on the card agreement. Some credit cards provide customers with a percentage (usually between 1% and 5%) of their total amount spent back as a credit.
3. Credit Cards Can Be Used as a Safety Net
We are truly never prepared for life’s unexpected challenges. If you are having a difficult time financially due to a sudden expense, such as an unplanned medical bill, you can use your credit card to help keep your finances stable until your next pay period.
If you wish to purchase a high-value item (such as a laptop or a refrigerator) but do not have the funds to pay the full amount upfront, you can convert the purchase into monthly installments at no extra cost (known as “No Cost EMI”).
Which Bank’s Credit Card Is the Best Choice?
In India, every bank offers a range of credit cards designed to cater to diverse needs. You should select a card that aligns best with your lifestyle:
HDFC Bank: Their cards (such as Millennia or Regalia) are considered the best options for online shopping and lifestyle-related expenses.
SBI Card: If you are looking for a reliable card that offers benefits across various categories—including travel, shopping, and fuel—an SBI Card is an excellent choice.
ICICI Bank: Their ‘Amazon Pay ICICI Card’ is extremely popular among online shoppers, largely because it is offered as a “Lifetime Free” card.
Axis Bank: When it comes to cashback rewards, the Axis Ace and Flipkart Axis cards rank at the very top of the market.
Precaution: As a first step, contact the bank where you currently hold your savings account. You are more likely to be offered a ‘pre-approved’ credit card by your existing bank.
Utilising Credit Cards for Medical Treatment
Many people ask, “Is it possible to use credit cards for medical care?” Yes, it is possible!
Hospitalisation Due to Emergencies
When you are admitted into a hospital, you will typically have an upfront deposit payment due at the time of admission. Being able to make this payment using your credit card allows you to begin receiving medical treatment right away.
Specific Health Cards
Some banks have developed specialized “Health Cards” (for example, SBI Card Pulse) that include benefits such as annual free health check-ups, discounts on drugs at pharmacies, and reward points for all hospital expenses.
Setting Up Medical Bill EMIs
If you are hospitalized and receive a large bill, many hospitals allow you to pay for your hospital stay in monthly installments (EMIs) for a period of 6 to 12 months. This helps reduce some of the financial burden you will face following your hospitalization.
The Benefits of Credit Cards from Private Companies (Fintechs)
More private companies (fintechs), including OneCard, Slice, and Uni, are offering credit cards than ever before. These credit cards have a variety of advantages over other types of credit cards.
The approval process is much quicker than that of traditional credit cards.
The mobile applications used by these companies have user-friendly interfaces.
If your credit score is low, you still have a good chance of being approved for a credit card.
Warning:
It is important that before acquiring any cards from private lenders, you thoroughly read through their “Hidden Charges” & “Interest Rates.” Most of the time, they have much higher interest rates than traditional financial institutions do currently have.
If you are a first-time creditor and have found it difficult to get a credit card through traditional financial institutions, you may want to consider using one of these lenders; however, make sure to read over all of their rules and regulations.
Important Rules for Using a Credit Card:
Although it may be helpful to use your credit card, you can also find yourself in serious trouble with an unpaid balance if you don’t use it properly, so here are some tips to help you:
Always Pay Your Entire Payment—When making payments on your credit card, NEVER pay only the “minimum amount due.” Unpaid balances will accumulate interest at rates as high as 40%!
Don’t Take Cash from an ATM with Your Credit Card – The fees associated with taking money out of an ATM with your credit card will be exorbitant, and you will incur those fees and begin to accrue interest immediately.
Be Careful Spending (30-40% of Your Limit): When using your credit card, only use 30-40% of your maximum allowable limit to ensure that you maintain a good credit score.
Conclusion
Credit cards are great if they are used properly and responsibly. They provide you with benefits when shopping and travelling. They also act as a safety net by providing medical assistance to you in times of need. Prior to choosing a bank, you should consider your credit card needs; it is also important to be careful when obtaining credit cards from private financial institutions.
