The Importance of Having a Credit Card in 2023-2024

Credit cards are not just a convenient way to pay for your purchases, but also a powerful tool to improve your financial well-being and lifestyle. In this article, we will explore some of the benefits and features of using a credit card in 2023-2024, and why you should consider getting one if you don’t have it already.

  1. Buy on credit and pay later: One of the main advantages of a credit card is that it allows you to buy anything you want within your credit limit and pay for it later. This means you don’t have to worry about your monthly budget or cash flow, as you can spread the cost of your purchases over a period of time. You can also convert your purchases into low-cost EMIs (equated monthly installments) and repay them at your convenience. This can help you afford big-ticket items such as home appliances, gadgets, furniture, etc. without breaking the bank.
  2. Earn rewards and cashbacks: Another benefit of a credit card is that it rewards you for every transaction you make. You can earn reward points, cashbacks, discounts, vouchers, and other perks from various merchants and partners. For example, IDFC FIRST Bank credit cards offer unlimited and never-expiring reward points, which are easily redeemable. You can also get fuel surcharge waivers, online shopping deals, dining offers, and more. These rewards and cashbacks can help you save money and enjoy more benefits from your spending.
  3. Build your credit score: A credit card can also help you build your credit score, which is a measure of your creditworthiness and financial health. A good credit score can help you get better interest rates, loan approvals, insurance premiums, and other financial products and services. To build your credit score, you need to use your credit card responsibly, pay your bills on time, and maintain a low credit utilization ratio (the percentage of your credit limit that you use).
  4. Enjoy interest-free credit: A credit card also offers you an interest-free credit period, which is the time between your purchase date and your payment due date. During this period, you don’t have to pay any interest on your outstanding balance, as long as you pay the full amount by the due date. This can range from 20 to 50 days, depending on your card and billing cycle. This means you can enjoy free credit for your purchases and manage your cash flow better.
  5. Access emergency funds: A credit card can also act as a source of emergency funds, in case you need cash urgently. You can withdraw cash from any ATM using your credit card, up to a certain limit. Some credit cards, such as IDFC FIRST Bank credit cards, offer interest-free cash withdrawals for up to 45 to 50 days. This can help you tide over any financial crisis without paying any interest or charges.
  6. Travel with ease and style: A credit card can also make your travel experience more convenient and enjoyable. You can use your credit card to book flight tickets, hotel rooms, car rentals, and other travel services online, without carrying much cash. You can also get travel insurance coverage, complimentary lounge access, priority check-in and boarding, extra luggage allowance, and other travel benefits from your credit card. For example, HDFC Bank credit cards offer comprehensive travel insurance coverage and free access to exclusive airport lounges and railway stations in India.
  7. Shop online with security and convenience: A credit card can also enhance your online shopping experience, as it offers you more security and convenience. You can shop from any website or app, without worrying about fraud or theft. You can also use features such as one-time passwords, secure codes, and digital wallets to authenticate your transactions and protect your card details. You can also enjoy faster checkout, easy returns, and exclusive offers from online merchants and platforms.
  8. Track your expenses and budget: A credit card can also help you track your expenses and budget better, as it provides you with a detailed statement of your transactions every month. You can see how much you have spent, where you have spent, and what you have spent on. You can also categorize your expenses, set spending limits, and get alerts and notifications from your credit card provider. This can help you monitor your spending habits and plan your finances better.
  9. Pay your bills and recharges: A credit card can also help you pay your bills and recharges, such as your phone, electricity, gas, water, internet, etc. You can set up automatic payments from your credit card, so that you don’t have to remember the due dates or face penalties or disconnection. You can also get rewards and cashbacks for paying your bills and recharges with your credit card.
  10. Avail of other benefits and features: A credit card can also offer you other benefits and features, such as balance transfer, loan on credit card, add-on cards, etc. You can transfer your outstanding balance from other credit cards to your credit card and enjoy lower interest rates and longer repayment periods. You can also get a loan on your credit card, without any documentation or processing fees. You can also get add-on cards for your family members and share your credit limit and benefits with them.

How can I improve my credit score?

Improving your credit score is a smart way to enhance your financial well-being and lifestyle. Your credit score is a measure of your creditworthiness and financial health, and it can affect your eligibility and terms for various financial products and services, such as loans, credit cards, insurance, and more. A higher credit score can help you get better interest rates, loan approvals, insurance premiums, and other benefits.

There are several steps that you can take to improve your credit score, both in the short term and in the long term. Some of the most common and effective ways are:

  • Pay all your bills on time: Your payment history is the most important factor that affects your credit score, accounting for 35% of your FICO score. Paying your bills on time, every time, shows that you are a responsible borrower and can manage your debt well. On the other hand, missing, delaying, or skipping payments can hurt your credit score and damage your credit history. To avoid this, you can set up automatic payments, reminders, or alerts to ensure that you pay your bills by the due date. If you do miss a payment, contact your lender or service provider as soon as possible and try to rectify the situation. Late payments that are less than 30 days are not reported to the credit bureaus, so you may be able to avoid any negative impact on your score if you act quickly.
  • Use less of your available credit: Your credit utilization ratio, which is the percentage of your total available credit that you use, is another important factor that influences your credit score, accounting for 30% of your FICO score. A lower credit utilization ratio indicates that you are not overusing your credit and can handle your debt well. A higher credit utilization ratio, on the other hand, suggests that you are relying too much on your credit and may have trouble paying it back. As a general rule, it is recommended to keep your credit utilization ratio below 30%, but lower is better. To reduce your credit utilization ratio, you can pay off your existing balances, request a higher credit limit, or use multiple credit cards strategically.
  • Have a long and diverse credit history: Your credit history, which is the length and variety of your credit accounts, also affects your credit score, accounting for 15% of your FICO score. A longer and more diverse credit history shows that you have more experience and knowledge in using different types of credit, such as credit cards, loans, mortgages, etc. This can boost your credit score and make you more attractive to potential lenders. To build a long and diverse credit history, you can keep your old credit accounts open and active, as long as you pay them on time and in full. You can also apply for different kinds of credit, such as a secured credit card, a personal loan, or a car loan, as long as you can afford them and manage them responsibly.
  • Check your credit reports and dispute any errors: Your credit reports, which are the records of your credit activity and history, are the basis of your credit score. They are compiled by the three major credit bureaus: Equifax, Experian, and TransUnion. You can get a free copy of your credit report from each of the bureaus once every 12 months through You should review your credit reports regularly and check for any errors or inaccuracies, such as incorrect personal information, duplicate accounts, fraudulent transactions, or outdated information. If you find any errors, you can dispute them with the credit bureau and the information provider, and request them to correct or remove them. This can help you improve your credit score and protect your identity.
  • Avoid applying for too many new credit accounts at once: Every time you apply for a new credit account, such as a credit card or a loan, the lender will perform a hard inquiry on your credit report, which will temporarily lower your credit score by a few points. This is because applying for too many new credit accounts in a short period of time can indicate that you are desperate for credit or have financial problems. To avoid this, you should only apply for new credit when you really need it, and space out your applications over time. You should also compare different offers and rates before applying, and use prequalification or preapproval tools that only require a soft inquiry, which does not affect your credit score.

These are some of the best ways to improve your credit score fast and effectively. By following these steps, you can increase your credit score over time and enjoy the benefits of having a good credit score. However, you should also remember that improving your credit score is not a one-time event, but a continuous process that requires patience and discipline. You should monitor your credit score and credit reports regularly, and maintain good credit habits, such as paying your bills on time, using your credit wisely, and diversifying your credit mix. This will help you achieve and maintain a high credit score and a healthy financial future.

How long does it take to improve my credit score?

The answer to your question depends on various factors, such as your current credit score, the reason for your low score, the actions you take to improve it, and the type of credit product you are applying for. However, based on the web search results I found, here are some general estimates of how long it may take to improve your credit score:

  • If you have a good credit score (above 750) and you want to increase it further, it may take you around one month to see a slight improvement, by paying your bills on time, keeping your credit utilization low, and maintaining a good mix of credit.
  • If you have a fair credit score (between 550 and 700) and you want to reach a good credit score, it may take you around six months to see a noticeable improvement, by following the same steps as above, and also checking your credit reports for errors and disputing them if any.
  • If you have a poor credit score (below 550) and you want to improve it to a fair or good credit score, it may take you longer than six months to see a significant improvement, depending on the severity of your negative marks, such as late payments, defaults, collections, bankruptcies, etc. You may have to work on clearing your outstanding debts, settling your accounts, and rebuilding your credit history with secured credit products.

These are just approximate time frames, and they may vary depending on your individual situation and the credit scoring model used by the lender or service provider. The best way to improve your credit score is to monitor it regularly and follow good credit habits, such as paying your bills on time, using your credit wisely, and diversifying your credit mix. This will help you achieve and maintain a high credit score and a healthy financial future.

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