Is It Fine to Not Have A Credit Card?

There’s not any rule that your good credit history will only build with a usage of credit card. You can build a positive credit history with other loans also but it will be a difficult process.

In India, you need a 720 score to apply for any kind of loan and without a credit card it will not be easy. According to a survey of Statista, the number of credit card usage in 2023 has increased 63% as compared to financial year 2017. And this number is increasing year by year.

Source: Statista

There are few ways to build a good credit history without a credit card with some cons.

• Take other loans such as student loan and car loan and make payment on time. This may take longer to build a good credit history.

• Pay other bills on time such as rent, utility, phone or cable. Sometimes these payments are not recorded to credit reports.

• Become a partner with a credit card holder they can be your friends, or family members. Check that the credit bureaus consider the transactions of the partner or not.

Having a credit card is an individual's choice and depends totally on their financial goals. So these are some options to credit a positive credit card history, but you know the drawback, it is a long process.

How Credit Cards and Cashless Payment Capture the Indian Market?

In the last few years, the cashless payment system has become more popular among Indians. You can see scanners in every shop even in grocery shops also. Paying with credit cards in restaurants, and using e-wallet on the street to buy vegetables, now everything is possible.

Source: Getty Images

The buying behaviour of Indian consumers has evolved a lot. With the implementation of United Payment Interface (UPI) payments are getting faster and more convenient for customers. In comparison with the last three years, 72 billion online transactions have been recorded in the single financial year 2022.

Why Only A Credit Card?

Some people prefer to pay with debit cards and cash. Which is fine and an individual's choice, but there are drawbacks of using debit cards and cash as they don’t offer any cashback, signup bonuses, and rewards.

Here are the exciting benefits of credit cards:

1. Interest-Free Credit

By using a credit card you get an interest free loan for the time between purchase and final payment (upto 50 days). In this period, the bank doesn’t charge any interest, best to pay during an emergency.

2. Automatic Pay

This option is also called recurring payment, in which you can set up your monthly payments such as phone, electricity bill, tuition fees, etc. A good option to save a penalty amount.

3. Convenience

No need to carry cash everywhere, just swipe and pay. As stated above, now every vendor has a credit card swiping machine. A hassle free way to get rid of counting money during checkout. Also, connect your card with a digital wallet to scan and pay.

4. Rewards

On every purchase you get a certain percentage of the amount paid as a reward, this may differ bank to bank. Rewards, cash backs and vouchers depend on the type of your card, so check the benefit before applying.

5. Expense Tracker

At the end of every month you get a report of all your expenses in a month divided into different categories such as grocery, investment, utility bills, and others.

6. Safety

Carrying a handful of amounts from one place to another is not a safe option because there is a chance of dropping the money and pocket picking. With a credit card you don’t have to worry about a card lost, you will get a replacement after notifying the bank.

7. Extra Benefits

Some cards provide accidental death coverage, and fire and burglary protection for items you purchase. An insurance cover without any extra premium.

8. Credit Score

Among the best options to build a positive credit score, organisations such as CIBIL give a score based on the payment style of an individual. Timely payments will increase the score, and help you to get a loan and credit card fast in future.

There is no harm in using credit cards, unless you don’t know the proper usage of credit cards. Wrong use of credit will push you into debt and the interest rate is higher for late payments on credit cards. The interest rate can vary from 24% to 45% yearly fixed on the provider of card.

So, if you want to build a positive credit score fast, a credit card is a good option for you. Check the different cards available in your eligibility criteria and then opt for the one which gives better benefits.