Credit cards, or plastic money, are the most popular mode of payment today. Most of us didn't probably realize how quickly that small piece of plastic took its place in our world (and our wallet). So what is it that makes credit cards so indispensable for all and sundry? Let's examine a few factors here:



1. A matter of convenience Yes, this is the most important factor. Imagine stashing cash in all your pockets as against just a small piece of plastic. If you don't have the convenience of a credit card, you might end up dressing up for shopping in a way so as to maximize the pockets in which you can carry cash. With all that cash stashed everywhere on you, even your body movements get restricted hence causing even more inconvenience.

2. Safety As they say, carrying a lot of cash on you is never safe. This becomes even more important when you are traveling to far off destinations.Cash is not only easily visible from the bulge in your pockets but also the most liquid form of money i.e. stolen cash can be easily used without detection. Contrary to this, credit cards transactions are detectable and traceable. Moreover, each transaction is authenticated for the user who is carrying out the transaction. More so, cash can invite trouble in the form of muggers and more that just the money lead to physical harm as well. So it's even more prudent to avoid the display of cash and instead use plastic as a substitute.

3. Necessity Yes, though a bit unbelievable, it's true that the credit cards are a necessity in some cases. Buying air tickets online to get good deals or booking an accommodation or a rental car when traveling are examples wherein you cannot get the service unless you book using your credit card.

4. Planning budgets "Buy now, pay later with no interest", this is what it is popularly known as. You will find such adverts every where, be it your local stores or online shopping. What this means is that you can buy an item of $5000 today and pay for it in 10 equal installments of $500 each (can be up to 24 equal installments or more). Thus you don't have to dole out the entire amount at one go and can plan your expenditures more effectively, that too without any interest charges.

5. Rescuer in financially tight situations There are times when you need some extra cash immediately. In such emergency situations, when you don't have sufficient cash you can go on credit by using your credit card. Most credit cards provide up to 50 days of interest free credit.

6. Build credit rating Credit cards are a good way to establish your credit worthiness in the market. Based on whether you make timely payments or default on them, the credit card companies maintain your history and build your credit rating over a period of time. This can be shared with other financial institutions who want to check your credit worthiness before conducting financial transactions with you. This rating can also become handy when you are applying for loans or mortgages.

7. Saves time No need to worry about whether you have enough cash on hand or not. No need to spend time withdrawing cash from the ATM (or day/night cash machines). Just carry your credit card with you and all is taken care of.

8. Saves Money A lot of service providers give handsome discounts when you subscribe online or buy stuff online. This is because they would save on commission to agents and on costs of employing additional sales representatives, if everyone started shopping in person. These discounts are available from your airlines to your phone service provider or your internet connection provider.

9. Insurance Most credit card companies provide you free travel and accident insurance on your credit cards. Though this is limited and you could prefer to go for personal insurance, this can become handy at some odd times.

10. Fall back option when overseas You can treat your credit card as a supplementary source of money when overseas (i.e. if you don't want to treat credit card as your primary source in order to avoid paying commission etc on overseas credit card transactions). So, when you run out of cash or traveler's cheques you can rely on your credit card as a fallback option. Thus, your credit card can act as your savior in such situations. With so many benefits on the rack, credit cards are something that one cannot (rather should not) avoid. In fact credit cards are truly a necessity in today's world.