With rapid digitalization in the financial sector, online mode of transaction and plastic money are witnessing a gradual increase all over the globe, including India. It is evident by the growth of plastic currency, like the usage of credit cards, which grew by almost 27% during FY2019.
Needless to say, millennial are one of the driving forces behind this credit card boom. Hence, it is high time for parents to teach their teenage children how to manage their finances efficiently. Most new applicants remain in the misconception that credit cards are free money. Thus it is the duty of the elders to educate them about what is credit card and how to use it properly.
What is a credit card?
A credit card is a payment card issued by a financial agency, which enables cardholders to borrow funds for purchasing goods and services. Credits cards come with the condition that cardholders will repay the borrowed funds with interest along with other agreed-upon terms. Every credit card accompanies a pre-approved spending limit, also known as the credit limit.
Using these cards, individuals can fulfill a variety of financial requirements promptly. In case of repayment, customers have to follow a particular billing cycle. They can also avoid paying any interest if they repay the due amount within the grace period.
These concepts of credit card are essential for teenagers to learn, especially if it is needed for future use. Eventually, they will possess one once they are eligible for it. Hence, if they are made aware of what a credit card is and how to use a credit card wisely beforehand, it will be easier for them to avoid several financial pitfalls like debt traps in future.
How to use credit cards?
Once they develop a fundamental concept about what a credit card is, they should know how to use one wisely to reap all the benefits that it offers. Following are some of the tips that can help, especially the teenagers to understand how to use these cards like a pro.
- Paying bills before due date
Paying the bills before the due date is the key to maintaining a credit card efficiently. It also proves to be beneficial in the long run as it directly improves your credit score. Moreover, practising this habit unveils a plethora of additional credit card benefits, like improving their CIBIL score, which can help them avail other financial products in future.
- Usage of reward points
If you are looking for a credit card best-suited for young ones, then you must settle for a financial institution that offers substantial reward points. It will help them to save money on each transaction. In this regard, SuperCard can be an excellent option as it provides up to 20,000 reward points as a welcome bonus and additional points on almost every transaction. These reward points can be redeemed later in exchange of gifts and vouchers.
- Choosing easy repayment schedule
Individuals need to be consistent in repaying the bills to avoid any debt trap. Thus choose a credit card provider that offers an easy repayment structure. Financial institutions like Bajaj Finserv extend flexible repayment options like EMI facility and others.
They also provide pre-approved offers for instant credit card approval. These offers are also available for other financial products like business loans, personal loans, etc. You can check your pre-approved offer simply by entering your contact number and name.
- Using cards securely
Moreover, credit card users need to be careful in using their cards online, avoiding any kind of cyber theft. For that, you should try to transact with reliable websites only as much as possible.
All words may fall short of educating your teenage children about what a credit card is until and unless they have one of their own. Thereby you can consider providing them with a credit card and regulate the usage so that they can refrain from overspending on the credit account. It will give them an insight about how to repay the credit card debt responsibly from a young age.