Here's why every Indian millennial needs a credit card

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 Booking.com require either a traveler's credit card details or a down payment to make bookings in advance.
 
To explore the world and save money while you are at it

When it comes to splurging on travel, credit card is the ideal option to quench one's wanderlust while going easy on the wallet. Through a cocktail of brand partnerships, seasonal promotions and lifetime privileges, these fine pieces of plastic give cardholders access to exclusive deals and savings opportunities in destinations across the globe. Also, millennials are keen to pursue rewarding travel experiences. According to a survey by Hotels.com, 86 per cent of young travellers want to travel to experience a new culture. Loaded with partnerships from global airlines and hotel chains and digital-savvy brands like Airbnb and Uber, a credit card is a quintessential travel tool by design.
 
To earn reward points on your spends

Sky is the limit when it comes to earning points on spends and converting those into rewards ranging from materials to experiential. As reported by Business Insider in 'The Credit Card Rewards Explainer', 59 per cent consumers rank rewards as a major reason for adopting a credit card, a number that has been growing year on year.

Credit card issuers tailor products for diverse tastes and preferences. These cards offer bonus points at every possible milestone - welcome gifts, monthly spends, anniversary renewal, standing instructions and everyday spends - which can be redeemed for hand-picked products in reward catalogues. In some cases, they also have the flexibility to make their next purchase or book their vacation by paying with membership rewards points.
 
To be covered in case of emergency

There is no bigger financial nightmare for a young working professional than being a victim of fraud or theft. Using a credit card is a form of insurance on spending, which gives you the security of knowing that the amount will be returned, no matter what. All companies offer airtight security features to card members so that they can use their cards without worry. You get 24x7 world class customer care support, 100 per cent fraud protection on any unauthorised transaction after reporting loss of card and free card replacement.

In case of an accident or natural calamities, a credit card will ensure access to instant cash, thus making provisions for unanticipated expenses. In some cases, points can be converted as a cash reserve to pay off credit card balances or it may serve as a lifetime emergency fund as they never expire, nor have an accumulation limit. As for those fearful of their spendthrift nature, they can even request their credit card issuer to reduce the credit limit or convert bill payments into EMI, customising the credit structure to suit their specific requirements.
 
Finally, using a credit card follows the same logic as keeping a digital tab on expenses or using apps to manage expenses on a debit card, but with as much convenience and more benefits.

by, Abhinava Paliwal - Vice President, Consumer Products and Travel Lifestyle Services, at American Express India