Big-ticket purchases can feel overwhelming, especially when it comes to deciding how to pay for them. Credit cards offer several benefits for big-ticket purchases; they not only help you build credit and earn rewards but also offer additional benefits that cash or debit cards can’t match. Here’s why using your credit card for such expenses might be a wise decision.
Convenience
Using a credit card can make big-ticket purchases more convenient and hassle-free, especially when you are short on funds. For instance, you want to buy a television of Rs. 40,000, but your income can’t cover the cost. With a credit limit of Rs. 1 Lakh on your credit card, there’s no need to dip into your savings, you can use your card to make the purchase. Credit cards offer an interest-free period during which you don’t need to make any payments. However, ensure to pay your bill in full and on time to avoid high interest charges.
Rewards & cashback
One of the major features of credit cards is the rewards and cashback programs they offer. Many credit cards offer reward points or cashback for every penny you spend, which can add up quickly with big-ticket purchases. Whether you’re purchasing electronics, furniture, or booking an expensive trip, using a credit card can help you earn significant value back. The value back can be offered through cashback to rewards or travel miles, which can be redeemed for travel, merchandise, statement credits, or even cash, depending on the card. Therefore, it is important to analyze your spending pattern and apply for credit cards that align with your lifestyle to make the most of them.
Monthly EMIs
Equated Monthly Installments (EMIs) can make managing large expenses easier by breaking down the cost into smaller installments. Many credit cards offer the option to convert big-ticket purchases into smaller and affordable EMIs, allowing you to spread the cost over several months rather than paying the entire amount at once. Some card issuers also allow you to avail No Cost EMI, which means you can pay for your purchase in installments without incurring any additional interest charges.
Similarly, the balance conversion facility is another solution for managing outstanding credit card balances. By converting your balance into affordable EMIs at a lower interest rate, you can break down the cost into several months and pay as per your requirements.
Helps you build credit
Using your credit card for big purchases can positively impact your credit score if managed responsibly. Making regular, on-time payments and keeping your credit utilization low represents that you are a responsible borrower and can positively impact your credit score. Over time, this can help you build a strong credit history, which makes it easier to get approved for credit cards or loans at a lower interest rate in the future.
Bonus rewards & additional benefits
Beyond rewards, credit cards often offer bonus rewards and additional benefits for big-ticket purchases. Some cards offer higher reward rates for specific categories or promotional periods, which can be especially beneficial when making large purchases. Besides this, some credit cards also offer decent welcome benefits through which you earn bonus vouchers or rewards and redeem them for travel, dining, cash, or everyday purchases.
The final decision to use your credit card for big-ticket purchases depends on your financial situation, lifestyle, and other circumstances. Suppose you can manage your spending wisely and pay off your balances regularly. In that case, credit cards can be a smart way to save on expenses while earning rewards, discounts, and additional benefits. However, it’s important to make timely payments to avoid accumulating high-interest debt. By using your credit card responsibly, you can maximize the benefits of your big-ticket purchases while maintaining financial health.