Here's why every Indian millennial needs a credit card – Money Perception

Having grown up in an era of digital adoption and consumerist culture, millennials often have the luxury of choice and the feeling of instant gratification. They are known for living their dreams and putting priority on personal fulfilment – be it going on an unplanned trip during a long weekend or splurging on a fancy piece of technology – as most of them come with a buy-now-pay-later mindset.

Projected to be half the global workforce by 2020 (as reported by PwC in ‘Millennials at work: Reshaping the workplace’) and with increased spending power, the ability of today’s millennials to manage wealth and income will be a force to shape the world economy for years to come. Fortunately, the representatives of India’s demographic dividend have begun to control their personal finances, and are focused on building credit lines and accumulating rewards. To access a pay cheque before payday, book a round-trip flight solely on air miles or apply for a loan based on their credit score, the ownership of a credit card can be summed up in three words: To do more.

To make convenient cashless payments across platforms

India’s rapid digital payment evolution has worked up a consumer appetite for digital payments. According to a recent survey called ‘India Consumer Payment Research Report’ by TransUnion CIBIL, 93 per cent of Indians use their credit cards for discretionary spends like shopping across categories, both on e-commerce portals and at brick-and-mortar stores. As consumers recognise the convenience of cashless payments to keep a tab on personal consumption expenses and further appreciate the exponential innovations happening in the space of payments technology, cash is being disrupted. Today, both consumers and merchants can take advantage of quick response (QR) code, near-field communication (NFC), biometrics and contactless payment technologies, which emulate credit cards. The plethora of options in demonetised India eliminates the hassle of withdrawing cash from ATMs and banks, and the paperwork of writing cheques for high-value expenses.

To defer payments and pay in parts

A credit card is the perfect tool to map expenditures against incomes and optimise a hard-earned salary. Credit cards are designed to enable freelancers and full-timers alike to optimise their pay cheques, by granting an extended window of payment to cardholders. A credit provider will extend a line of credit, which can be paid off even three weeks after the cycle’s statement is issued. In brief, you can take an advance from your credit issuer in the form of credit and pay off what you owe with ease. Select credit card issuers also offer a pay-in-parts facility so that cardholders can pay their bills for big spends in monthly instalments.

To build a strong credit line for securing loans in the future

Credit information company CIBIL calculates the creditworthiness of loan-seekers based on their credit history. Financial institutions also view credit cards as a rite of passage into financial maturity, and established credentials on the credit card indicate one’s ability to manage the gravity of a loan. A healthy credit track record is a pre-requisite if you want to apply for personal loan, home mortgage or car insurance.

In some cases, this can serve as a background check for tenants and employers. At times, a high credit score means you will be paying lower/more competitive interest rates than the rates paid by those with lower credit scores. Moreover, to apply for university entrance exams or shop at an international e-commerce site, a credit card is the most convenient option. For example, room booking aggregators such as Airbnb and require either a traveler’s credit card details or a down payment to make bookings in advance.