Financial independence means freedom from money-related worries. It is achieved by having a set of marketable skills, using those skills productively to generate an income, and using that income in a disciplined and responsible fashion to meet needs.
Credit cards can be of great help if you are struggling to achieve financial freedom. Here are some of the ways they can help you, according to CRED:
By meeting steady needs at times of lumpy income
The current crisis has seen incomes fluctuate for many, and become unpredictable for many more. In such times credit cards are a heaven-sent instrument for balancing out lumpy income with steady needs. For example rent, fuel, and school fees are monthly fixed expenditures. By moving these expenses to credit card, anyone can free up liquidity for other purchases, as well as claim rewards and points that can help optimize spending.
Tracking to stay on track
A key benefit of credit cards is that, by maintaining a record of financial transactions, they help manage one’s expenses. Expenses can be tracked and monitored much better when there’s a record, accessible via a statement or on-demand.
Helps in meeting urgent needs
In a state of emergency, credit cards can always come handy, helping users to meet urgent needs like unforeseen medical expenses. In such a case, credit cards become lifesavers by guaranteeing easy solutions, or if an additional premium needs to be paid as part of investments, credit cards come to the rescue once again.
Good financial behavior
Credit cards allow one to build up a strong record of creditworthiness which reflects via credit history. Disciplined and responsible usage is rewarded with good credit score, which helps in qualifying for bigger loans with better rates that may help support larger life goals such as starting a business or buying a vehicle or house.
Provides international spending
Most cards provide international spending which is necessary as global purchases often simply cannot be made without a global credit card. While these cards do not normally charge higher fees for international transactions, they may use adverse currency conversion rates that favor the card issuer which can be a small price to pay for the sheer global access that the user would otherwise be shut out from.
However, customers should put in the right level of responsibility and discipline while using credit cards as they can also be a reason of financial anxiety if not handled properly.
Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions
First Published: IST