Credit card benefits: What money can't buy

The benefits for credit cardholders don't end with interest-free spending, cash-back offers and reward points. A squeaky clean credit card history can help you get a high credit score from a credit agency such as Cibil. A good credit report, in turn, will come in handy when you go looking for a loan.

The higher your score, the lower the rate offered to you. Besides, some banks offer loans only to customers who have some sort of credit history. “After the 2008 downturn, it has become an important filter in disbursing loans,” says Arvand Hali, head of retail assets, Dhanlaxmi Bank.

There are other ways a good repayment record can help. Whenever you make a big-ticket purchase on your card , your bank will offer to convert the payment into convenient EMIs. Do keep in mind that though the interest charged is not very high (14-16 %), some credit card issuers slip in a processing fee of up to 500.

Credit card issuers poach customers by offering to transfer the balance on a rival card at very low rates. “It is an easy way to get customers acquisition tool for banks and translates into real benefits for the customer,” says an industry expert. A bank will offer you a low rate of 1% per month for 3-6 months. Some banks don’t charge interest on the transferred balance for 1-3 months.

That’s good, but don't make a habit out of this. Such measures only provide temporary relief and if you continue to transfer balances across cards, you are only digging a deeper hole.

A careful spender can use his credit card statement to plan his expenses better. Some credit card companies such as Citibank give you an overview of your spending pattern across categories. It can tell you if you have been spending too much on entertainment or eating out. “Customers can analyse their usage and rebalance their spending patterns. It can help them in budgeting,” says Sandeep Bhalla, business head, Credit Payment Products, Citibank.

In the end, your credit card is a key that can open several doors. Cardholders get preferential treatment at hotels, airport lounges, shopping malls and restaurants. They may not result in monetary gains, but what they offer is often bigger than any discount. Air fare: 90,000. Reward points earned: 4,500. Preferential treatment at Heathrow Airport: Priceless.