Credit Cards have become a part of many people’s lives today and a lot of them have become habitual of making all their purchasing credit cards. But when it comes to big-ticket purchases, many cardholders find it quite difficult to decide whether they should make large purchases on credit cards or not. They are afraid of being stuck under high & unmanageable debt by spending a lot on their credit card. However, you need to understand the fact that using credit cards is never disadvantageous as long as you are ready to use them responsibly. Some people manage credit cards very well even after spending a lot on them whereas others find themselves unable to do so. In this article, we will make you understand when should you use credit card for big purchases and when you need to avoid the same. Keep reading to know more:
Advantages of Making Large Purchases Using Your Credit Card
You Earn More & More Reward Points
Almost all credit cards offer reward points or cashback on all your spends. When you make a big purchase, you can earn thousands of reward points that can be used to buy products/vouchers or to pay the statement balance. However, if you make the same purchase using cash, you will not earn any reward points or cash back, which means you don’t save anything. So, it is always better to make large purchases using credit cards than using cash, provided that you can make your credit card bill payment on time.
You Get Qualified For Welcome & Milestone Benefits
Many credit cards come with some welcome bonuses, to avail of which, you need to make a minimum spend. It doesn’t mean that you should purchase some unnecessary things just to get the welcome benefits, but if you have already decided to make a big purchase, you should better choose to pay for it using your credit card so that you get qualified for the welcome benefits. The same goes for the milestone benefits as well. To get the milestone benefits of a credit card, you need to achieve a minimum spend threshold. For example, if your credit card comes with a milestone benefit providing 20,000 bonus points on every spend of Rs. 3 lakhs in an anniversary year, with 1 Reward Point = Re. 0.50, you will save Rs. 10,000 on achieving the spend of Rs. 3 lakhs. Big-ticket purchases help you achieve this spending threshold, which can be quite difficult to achieve without making a large purchase.
Avail Maximum Benefits Through Spend Based or Other Offers
The credit card issuers keep launching spend-based offers from time to time, especially during the festive season. In India, a lot of people believe in making big purchases during festivals like Diwali and with your credit cards, you can save a lot on such purchases. But, you should also keep in mind that overspending is never a good idea. You should try to achieve the minimum required spend only if you really need to make a purchase and not otherwise.
You Can Convert The Bill Into EMIs
One of the biggest advantages of making big-ticket purchases on a credit card is that you can convert your purchases into EMIs, i.e, you can pay for them later in easy monthly installments. If you need to make a really big purchase and you feel that you can’t afford to pay for it all at once, you can purchase it on credit card EMI and pay in smaller parts every month. This post will help you understand more about credit card EMIs.
When Is It Right To Make Big Ticket Purchases Using Your Credit Card?
When It’s An Emergency
Credit cards might seem to be a blessing in emergency situations. Medical emergencies can never be predicted and if you don’t have much savings, you may find yourself helpless, and sometimes you even lose your loved ones due to lack of funds. In such situations, you can always use your credit card without worrying about your credit score it any other thing as nothing is more important than someone’s life. Not only this but there can be other types of emergencies or difficulties as well, which you can overcome by using your credit card.
When You Are Spending On Something That is Really Needed
As discussed earlier, you should make big-ticket purchases on credit cards only if it is really needed. Some people consider credit cards as easy access to money and they spend unnecessarily without thinking about how they are going to repay it later. But, before spending any amount on your credit card, you must make sure to think about whether you can afford to pay it later or not. However, if making a large purchase is really necessary, you can always go for it and convert the bill into EMI.
Points To Keep in Mind
- The most important thing to keep in mind while using credit cards is not to overspend. Before making any large purchase, you should think twice about whether you really need it to not.
- Another thing you should always keep in mind is to make the credit card bill payment on time. You can maximize the benefits of a credit card only if you make payments on time. If you have made a large purchase and you are unable to pay for it all at once, you should consider converting your credit card bill into EMIs, so that you can avoid extra charges like interest, late payment fees, etc.
Now, you might have understood that making big-ticket purchases can be the right decision sometimes and it can be a bad idea as well, depending on a lot of factors and conditions as discussed above. Before making a large purchase on your credit card, you must consider a lot of things and think wisely about whether you really need it to not. Ans most importantly, you should have a proper strategy for your credit card bill payment so that you can avoid any negative impact on your credit score. If you have any further doubts regarding the topic, you can freely ask us in the comment section below.