When planning big purchases, you may sometimes find that you are low on funds. During these times, a credit card can be quite helpful. A credit card may offer you a hefty credit limit. You can make big purchases like home appliances and state-of-the-art gadgets using this credit. 

Thankfully, getting a credit card has become easy nowadays. You can credit card apply online on any of the banks’ websites. Then, you only need to fill in minor formalities, and you can have your credit card delivered home. But should you use a credit card for such big purchases? Let us explore this question in detail.

Why Use a Credit Card for Big Purchases?

Firstly, there are many reasons why you should use a credit card for big purchases. 

• Convenience and Accessibility

Using a credit card is quite convenient as you don’t need to pay the complete amount right away. You no longer need to wait months to save up enough to make these big purchases. A credit card can instantly give you access to your dream gadgets (or other products).

• Rewards Points and Cashback

Some banks also give the added benefit of accumulating reward points and cashback on using credit cards regularly. The larger your purchase the more reward or loyalty points you can win. The rewards offered can also be in the form of instant cashback and discount coupons. 

• EMI Options

After you make a large purchase on your credit card, you can convert it into equated monthly instalments (EMIs). For example, you may find that the credit bill will burden you for the next month. In such cases, you can convert that particular transaction into EMIs under a tenure of your choice. 

• Developing Healthy Credit History

By regularly using your credit card, you can build a positive credit history. This is a track record that shows banks that you have paid your credit bills in a timely manner. This can increase your credit score, which may come in handy when you try to apply for a loan. 

Why You Shouldn’t Use a Credit Card for Big Purchases?

• High Rates of Interest

Due to an unpredictable situation, you may not be able to pay your credit bill after making a big purchase. In such cases, you can make a minimum payment each month. However, this leaves a credit card balance that gathers interest at a very high rate. 

• Negative Impact on Credit Utilisation Ratio

When you make big purchases on your credit card, they take up more of your credit limit, which can affect your credit utilisation ratio. To maintain a good credit score, it is advisable to only use 30% of your credit card’s limit every month.

• Spending Impulsively

If you get into the habit of making big purchases with your credit card, it can lead to impulsivity. When you start making such big purchases impulsively, it can hamper your financial discipline, ultimately impacting your ability to save.

• Potential Hidden Fees and Charges

Some banks may have hidden fees and charges on credit bills, such as transaction fees on big purchases. You should be aware of these when making big purchases. If you find that there are such fees, it is best not to make big purchases using that credit card. 

When to Use a Credit Card for Big Purchases?

• One factor you should always consider is your ability to repay and clear your credit card balances each billing cycle. You should make big purchases with your credit card only when you are confident that you can pay the credit bill.
• Some banks may offer introductory offers. To take advantage of these, you can opt for a credit card, apply online, and proceed to make your big purchases using these offers.
• You can also earn regular rewards and bonuses when using your credit card for big purchases. With each big purchase, you can accumulate several loyalty points. You may use these points for future purchases. This makes using credit cards for big purchases quite economical. 

Conclusion

When you credit card apply online through the bank’s website, the process usually begins by submitting your details and waiting for a follow-up from a bank representative. However, it’s essential to use your credit card responsibly, particularly for larger purchases. Your capacity to manage repayments effectively is vital to making the most of your credit card without facing financial difficulties.