Why Credit Cards are More Often Used than Debit Cards?

Why Credit Cards are More Often Used than Debit Cards?

Credit card users make 3 times more online purchases than debit card users, according to research by Business Insider India and the most recent data from the RBI. This is true even though Indian banks only issue 8 credit cards for every 100 debit cards.

Indians are quickly catching up to developed nations in terms of credit card use thanks to credit card offers, an interest-free credit period of 48 days, and other perks. The average transaction value, which is three times higher for credit cards, shows that consumers also prefer to use them to make “large transactions.”

This indicates that consumers are using credit cards to manage their finances because the 48-day interest-free grace period enables them to make sure they have enough liquid cash to cover their daily needs while shifting the burden of spending to credit card issuers. Other unexpected findings in the RBI data can be found in addition to the stark difference between the value of each credit card and a debit card.

Our previous report indicates that IndusInd Bank has the most valuable credit card holders, not HDFC, ICICI, SBI, or Citi Bank. In actuality, neither SBI nor India’s large private banks appear on the list of most valuable credit cardholders. Users of credit cards typically spend twice as much online as they do offline, indicating that they prefer the added security that credit cards provide when making purchases online.

• Buy Now Pay Later 

This is the most important reason why credit cards are becoming more popular. You can easily buy the thing and anything else without thinking about it when require and pay for it later. In emergencies, major expenses, or special occasions, you do not need to break fixed deposits or take out expensive personal loans. You can simply use your credit card to pay. Second, because you must pay almost a month later, you will continue to earn interest on that amount. You can also pay the amount in EMIs. As a result, you are not required to pay the entire amount at once.

• Rewards and promotions

The majority of credit cards come with a number of promotions and rewards to entice you to use your card. These might include cash back or reward points that you accrue every time you swipe your card and can then exchange for air miles or be applied to your outstanding card balance. In order to help you save money, lenders also offer discounts on large purchases made with credit cards, like plane tickets, trips, or other expensive items.

• Flexible credit

An interest-free period, which is a time frame during which you won’t be charged interest on any outstanding credit, is a feature of credit cards. If you pay off the entire balance due by the credit card bill payment due date, you can get free, short-term credit for a period of 30 to 48 days. As a result, you can gain from a credit advance without having to shell out the fees related to having an unpaid balance on your credit card.

• Purchase Protection

Credit cards provide additional security in the form of insurance for lost, damaged, or stolen card purchases. If you want to make a claim, you can vouch for its validity using the credit card statement.

• Safety

Money from your debit card is directly debited from your account in the event of internet fraud or theft. The bank must be contacted again for a solution after that. On the other hand, a credit card will have money deducted from it after a month, so you can stop the transaction while the bank looks into it.

• Manage good credit history

The best part of having a credit card is this. When applying for a loan, credit history is important, just like the CIBIL score. It may decide whether you qualify for the loan, how much you can borrow, and even the interest rate. Higher interest rates apply to people with bad credit histories. Maintaining good credit is facilitated by using credit cards responsibly.