Credit cards have gained immense popularity in recent years due to their numerous benefits, such as rewards, cashback, enhanced security, and assistance in building your credit score. In this article, we will explore several reasons why credit cards are considered superior to debit cards. We will also shed light on the specific advantages offered by co-branded cards, a subject covered in BankBazaar’s latest campaign, ‘A to Z of Credit Cards.’ Let’s delve into the crucial reasons why credit cards outshine debit cards.
Reward Points
One of the most recognized features associated with credit cards is reward points. Almost all credit cards offer various types of reward points on different expenditures like dining, entertainment, travel, shopping, and more. Reward points are typically calculated based on a certain amount spent, often as 1 reward point for every X amount spent, which translates to 1 reward point for every Rs. 100 spent. Some co-branded cards even offer accelerated reward points, such as 2x or 5x, on specific categories listed on their websites.
If you regularly make online purchases, order food online, or have a strong loyalty to a particular brand, co-branded cards associated with that brand can help you save on both online and offline transactions. For example, if you frequently travel with a specific airline, you can choose their co-branded card to earn accelerated reward points and various benefits.
Joining Benefits
Many credit cards provide customers with different joining or sign-up bonuses. These benefits may include reward points, cashback, complimentary memberships, free flight tickets, and gift vouchers, often aimed at offsetting the joining fee. Some card issuers or banks even waive the joining fee if the cardholder makes a certain amount of purchases within a specified period.
Cashback and Discounts
Credit cards offer attractive cashback or discounts on various transactions to make your purchases more affordable. While some of these benefits are offered throughout the year, card issuers often enhance their offers during festival seasons to attract customers. Cashback or discounts typically range from 1% to 15% of the transaction amount and are available for different categories such as utilities, groceries, entertainment, dining, and travel. Fuel surcharge waiver is another common cashback benefit provided by many cards, helping you save on fuel expenses.
Transaction Security
Apart from rewards and perks, credit cards are more secure for transactions compared to debit cards. This is primarily because credit cards come with robust consumer protection features, such as the ability to dispute unauthorized transactions and offer protection against fraud. Debit cards, on the other hand, do not provide the same level of security.
Building and Improving Your Credit Score
One of the most significant advantages of credit cards over debit cards is their potential to help you build and improve your credit score. Your credit score, a three-digit number, holds immense importance for your financial health and determines your access to credit. If you want to establish a credit history, getting a credit card and using it responsibly by maintaining a low credit utilization ratio and making timely payments can be beneficial. The information about your credit card usage is reported to credit bureaus and can positively impact your credit score. In contrast, debit card usage does not contribute to building or improving your credit score.
Widespread Acceptance
In India, credit cards are widely accepted, especially for online and large-scale transactions. An excellent example is online streaming services, where registering a credit card is often mandatory to access the services. For overseas transactions, credit cards are preferred due to their security and wider acceptance.
