Emergencies are unpredictable and can cause a financial dent if you’re unprepared. Sudden mishappenings, like a medical emergency, car breakdown or malfunctioning home appliance can happen at any time. But, did you know your credit card can be a useful tool for this? From using reward points to taking advantage of an interest-free period, let’s understand how to utilise credit cards to grow your emergency fund.

Understanding the importance of an emergency fund

An emergency fund is often referred to as a financial safety net, and for a good reason. It serves as a buffer against life’s unforeseen and unexpected events – those that are beyond your control, yet have a direct impact on your financial health. Such emergencies could range from a sudden job loss, a major health issue, or unanticipated home or car repairs.  

Here’s why an emergency fund is crucial for financial stability:

• Financial security: Having an emergency fund gives you peace of mind, knowing that you can handle sudden financial shocks. It provides a safety cushion that allows you to cover unexpected expenses without the need to take on high-interest debt.
• Protection of investments: If an unexpected financial emergency arises, you may be forced to liquidate your investments at an inopportune time, possibly even making a loss. An emergency fund protects your investments by providing an alternative source of funds.
• Career flexibility: An emergency fund can provide the financial security needed to take calculated career risks. It might be the difference between staying in a job you’re not satisfied with and taking the plunge into a new career or starting your own business.

The power of credit cards during emergencies

Credit cards can be a financial lifesaver during emergencies, offering immediate liquidity when you need it the most. Let’s explore the various ways in which you can utilise your credit card for emergency situations:

• Medical expenses: Medical emergencies are unforeseen and often come with hefty expenses. Your credit card can serve as an instant source of funds to handle these expenses, ensuring that you and your loved ones receive immediate medical attention without any delay. Many credit cards also offer health-related benefits, such as cashback on pharmacy purchases or healthcare services.
• Home repairs: Sudden home repairs, whether it’s a leaky roof or faulty appliances, can disrupt your budget. In such situations, your credit card can provide the necessary funds to undertake the repairs immediately, saving you from further damage and potential costs.
• Gifts: Unexpected occasions such as weddings or birthdays may require you to buy gifts at short notice. A credit card allows you to make the purchase instantly, providing you the convenience to repay the amount later.
• Travel: Whether it’s an unplanned trip or an emergency travel situation, your credit card can cover the expenses, ranging from flight tickets to hotel bookings. Some credit cards also offer travel benefits like free lounge access or travel insurance, making your journey more comfortable and secure.

Maximising the power of reward points

Reward points or cashback earned from your credit card transactions can be an unexpected source of savings during emergencies.

• Redeem points for purchases: Most credit cards allow you to redeem your accumulated reward points to pay for purchases on partner websites. This can help you save on essential expenses during emergencies. The Platinum Visa Credit Card by IndusInd Bank is designed to enhance your reward-earning potential. With this card, you can earn 1.5 reward points for every ₹150 spent, allowing you to accumulate rewards faster.
  
• Ticket bookings: If your emergency requires travel, you can redeem your reward points to book flight / train / bus tickets. This can considerably reduce your travel expenses. For instance, by accumulating air miles on your IndusInd Club Vistara Explorer Credit Card, you can save substantially on future travel expenses.
  
• Paying credit card bills: IndusInd Bank Credit Cards allow you to convert your reward points to cash credits. These credits can then be used to pay off your credit card bills, thus reducing your financial burden.

Making the most of the interest-free period

Credit cards offer an interest-free period, usually ranging from 20 to 50 days. This period starts from the date of the credit card statement generation to the due date of the balance payment.

During this period, you can use your credit card to make purchases or handle emergencies without incurring any interest charges, as long as you pay the total amount due by the due date.

This interest-free period can act as a short-term emergency fund, providing immediate liquidity without any additional costs.

Smart spending for reward maximisation

To maximise rewards on your credit card, consider the following tips:

• Fuel: Fuel surcharge waiver is available on all IndusInd Bank Credit Cards. Use credit cards like IndusInd Bank’s Legend Credit Card to-get 1% fuel surcharge waiver across all fuel stations in India.
  
• Dining: Earn reward points by enjoying meals at your favourite restaurants. IndusInd EasyDiner Credit Card allows you to enjoy meals at your favourite eateries and simultaneously earn reward points. This card offers an array of dining benefits, including a complimentary 1-Year EazyDiner Prime membership worth ₹2950, an instant discount of up to 25% (up to ₹1000 off) each time you book and pay via the EazyDiner app, and complimentary premium alcoholic beverage at over 200 selected restaurants for every diner. Now, every meal can be a rewarding experience.
  
• Travel: Accumulate air miles on your credit card for future travel, can help you save on your travel expenses.  By accumulating club vistara points on your Club Vistara Explorer Credit Card, you can save substantially on future travel expenses. This card goes a step further, eliminating the foreign currency mark-up on all international spends, and even gifts you complimentary business class ticket vouchers upon reaching milestone spends.

These rewards can be used to offset your credit card bill or for additional purchases, helping you save money. You can direct the saved money towards growing your emergency fund.

For example, with the IndusInd Bank Nexxt Credit Card, you earn 1 reward point for every ₹150 spent, which is equivalent to ₹0.75 in cash credit.

If you spend ₹1,50,000 on shopping and dining, you would earn 1,000 reward points or ₹750 in cash credit. This can be added to your emergency fund, helping you build it over time.

Conclusion

Building an emergency fund requires discipline and strategic planning. Your credit card can be a helpful tool in this process, allowing you to handle emergencies and grow your savings. The key is to use your credit card wisely and make timely payments.

IndusInd Bank’s Credit Cards come with attractive features such as a 100% digital application process, and reward points that don’t expire and can be converted into cash credits. Some cards even offer lifetime free benefits, ensuring there are no joining or annual fees. Harness the potential of your credit card today and give your emergency fund a significant boost.

Ready to take the right step towards growing your emergency funds? Apply for a credit card online with IndusInd Bank now!

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.

Financial decisions can sometimes be confusing, especially when it comes to choosing between a credit card and a personal loan. But don’t worry, we’re here to help you understand these options. Let us take a look at the differences between credit cards and personal loans. This blog will help you figure out which one suits your needs. Learn about these financial tools and make wise choices for your money. Let us understand the features and benefits of credit cards and personal loans.  

Understanding credit cards

A credit card is a financial instrument that allows you to borrow money against a pre-approved credit limit for purchases or cash withdrawals.

IndusInd Bank provides a completely digital process to apply for credit cards online, making them accessible and easy to apply for.  

Some features of credit cards include:

• Reward points: You earn reward points every time you use IndusInd Bank Credit Cards. These points don’t expire and can even be converted into cash credit, which can then be used to pay off your credit card bills.

For example, with the IndusInd Bank Nexxt Credit Card  , you earn 1 reward point for every ₹150 spent.

• Premium memberships: IndusInd Bank Legend Credit Card offers a complimentary priority pass membership that helps you enjoy access to 600+ lounges across the world..
  
• Forex benefits: IndusInd Bank Legend Credit Card provides discounted foreign currency mark-up at 1.8% for foreign currency transactions on your primary and add-on cards. On the other hand, the Club Vistara Explorer Credit Card offers zero foreign currency mark-up on all your international spends, so you don’t have to worry about paying extra on your international trips.

These features make IndusInd Bank Credit Cards an excellent choice for regular expenses and short-term borrowing.

Understanding personal loans

A personal loan is a lump sum of money that you borrow from a bank or other financial institution, which you agree to pay back in regular installments over a specified period.

Key features of IndusInd Bank Personal Loans:

• Digital process: The application process is entirely digital and paperless, making it convenient and quick. You can avail of a personal loan right from the comfort of your home.
• Low interest rates: IndusInd Bank offers interest rates starting from 10.49% p.a.
• Flexible tenures: You can choose a suitable tenure ranging from 12 to 48 months, according to your repayment capacity.
• Sizeable loan amounts: You can borrow an amount ranging from ₹30,000 to ₹5 lakhs based on your requirement and eligibility.
• EMI calculator: IndusInd Bank’s Personal Loan EMI Calculator helps you plan your monthly budget efficiently. You just need to enter your loan tenure, amount and interest rate into the calculator, and it will show you the monthly EMI within seconds. You can even try out different variations to arrive at an EMI amount that suits your budget.
• Minimal documentation: You only need to enter your PAN and Aadhaar details to apply. This makes the application-process hassle-free since it doesn’t require you to input/upload multiple documents.

Personal loans can be used for any purpose and can cover various expenses, such as weddings, medical emergencies, travel, education home renovations etc.

Comparison: credit cards vs personal loans

While both credit cards and personal loans provide quick access to funds, each has a few distinct advantages over the other. Here is a comparative overview:

• Interest rates: Credit cards generally have higher interest rates than personal loans, making them more expensive for long-term borrowing.
• Repayment structure: Credit cards have a revolving credit line, while personal loans have a fixed repayment structure, making personal loans more predictable.
• Access to funds: Credit cards offer instant access to funds, while personal loans require a one-time application and approval process.
• Usage: Credit cards are ideal for daily expenses and short-term borrowing, while personal loans are suitable for large, one-time expenses.

Deciding between a credit card and a personal loan will largely depend on your financial need, repayment capacity, and the urgency of funds. Here are some scenarios to guide your decision:

Case study 1: wedding

Take the case of Rohit and Alisha, a soon-to-be-married couple in Delhi. They are planning a traditional Indian wedding. To fund this event, they are considering two options: getting a credit card with a high credit limit or taking out a personal loan.

A credit card could provide them with instant access to funds. However, they know that this is going to be a massive amount of spending and will require time to repay. Thus, a personal loan seems like a more structured solution.

With a fixed EMI and a comparatively lower interest rate, they would know exactly how much money they have to repay every month.

Given the scale of their expenses and their ability to plan repayments, Rohit and Alisha plan to apply for a personal loan to fund their wedding.

Case study 2: start-up saga

Meet Meera, a promising entrepreneur planning to kick start her own IT firm. She needs to buy laptops, servers and other equipment but is short on funds. Her choices, like Rohit and Alisha, boil down to a credit card and a personal loan.

However, Meera’s circumstances are different. She is expecting to close a big contract in a few months and requires a temporary financial buffer. For Meera, a credit card becomes a viable solution.

The immediate availability of funds, the rewards on purchases, and the ability to pay back within the grace period without any interest are decisive factors. Thus, Meera plans to apply for a credit card to fund her start-up expenses.

These case studies highlight how both credit cards and personal loans can serve different needs based on the financial situation, repayment capacity, and urgency of funds.

Wrapping Up

No financial product is better than the other – it just depends on what you need the funds for. Remember, your personal finance decisions should be rooted in your needs and financial health.

IndusInd Bank offers a broad range of instant credit cards and personal loans to cater to your different financial needs. With its 100% digital process, getting access to these financial products is extremely convenient.

Whether you need a financial product for daily expenses, a big-ticket purchase or a financial emergency, consider the options available to you carefully. It’s always wise to assess your financial needs, explore the options available and select the one that suits your circumstances the best.

Apply now for IndusInd Bank Credit Cards and Personal Loans. The journey to sound financial management is just a click away.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.