In the digital era, the rise of freelancing and the gig economy, in India is extremely high because of the trends in outsourcing culture in today’s era. So, with the increasing work, there is an increasing number of freelancers. As there are no specific guidelines set for all freelancers, you can become a freelancer at any point in your life. But as we all know, being a freelancer directly means that you don’t have any financial security.
So it becomes more necessary for you to manage your finances in such a way that it doesn’t ever become a burden on you at all. So let’s start topic of why being a freelancer we Love Cards and not UPI. See in India, where online transactions have become the norm via UPI, we have forgotten the card and unique utilities. But cards are the most indispensable for managing finances effectively. By Card here we mean a Credit Card, so don’t get confused with a Debit/ATM Card or your pre-paid metro card.
Let’s explore the reasons why a card is a must-have for success in the world of freelancing in India. I have divided the topic into smaller sections for better understanding.
As we know being a freelancer we don’t have access to the current account we have to manage it with our own savings account, multiple freelancers have two savings accounts one is for personal expenses and the other for professional expenses but we are equally aware that there are multiple charges for maintaining them, you have pay for ATM Card, SMS Alert, even you have reserved some cash in it to be properly functioning. So it become a mess and plus they are also multiple scams going on this day, you don’t which scam happens in your account and it vanishes all your hard earn money.
Whereas a Card helps us a lot in separating business and personal expenses, just get a card and a regular savings account. The majority of the entry-level cards are free of cost and lifetime free. So suppose you have a card, it directly means you have zero liability
1. Convenient and Secure Transactions in Card over UPI
Just like the UPI, it is also convenient and secure as the backbone of digital transactions, credit cards provide Indian freelancers with a convenient and secure method to pay the expenses for the services they buy for their clients. Not only it also gives us fraud protection as well as insurance.
With the ease of spending both domestic and international payments, freelancers can bid farewell to the complexities of cash transactions or the anxiety of dealing with bounced checks. Instead, they can focus on their work, assured that their credit card ensures timely and efficient remittances.
2. Separate Business and Personal Expenses
For Indian freelancers juggling multiple roles, keeping personal and business expenses separate is paramount. Having a dedicated credit card for business use facilitates organized financial management. By tracking business-related transactions separately, freelancers can maintain clear records, making it easier to claim eligible tax deductions and maintain transparency in their financial affairs.
We are soon going to publish an article for ITR Filling for Freelancers, how and why they need to pay tax.
3. Efficient Cash Flow Management
The irregular payment schedules that freelancers often encounter can lead to cash flow challenges. It happens a lot, trust us after dealing with so many clients we have our personal experiences too!!
With clients taking varying lengths of time to clear invoices, freelancers can experience temporary financial constraints. A credit card serves as a valuable financial buffer during these times, enabling freelancers to cover essential business expenses without dipping into personal funds.
This ensures a smooth cash flow, allowing them to concentrate on their craft without undue financial stress and any kind of interest (in an interest-free period)
4. Quick Access to Emergency Funds
In India, unforeseen emergencies can disrupt financial stability, the harsh incident of the pandemic still reminds us of the whole event of how an emergency fund can help.
Whether it’s an unexpected medical expense or an urgent equipment repair, having a credit card provides freelancers with immediate access to funds when needed most. This readily available credit acts as a safety net, allowing freelancers to address unexpected situations swiftly, safeguarding their professional commitments.
5. Building a Positive Credit Score
Establishing a credit history is pivotal for Indian freelancers planning to expand their ventures or secure financial support in the future. A credit card, when used responsibly, plays a vital role in building a positive credit score. This credit history opens doors to better financing options, such as loans or credit lines, enabling freelancers to grow their businesses or invest in essential resources confidently.
6. Exclusive Rewards and Offers
Last but not least, numerous credit card providers in India offer attractive rewards and exclusive offers tailored to specific spending categories. By aligning credit card usage with their business expenses, Indian freelancers can enjoy benefits such as cashback, discounts, or reward points.
These perks can be reinvested into their freelancing enterprise or used for personal indulgence, incentivizing responsible credit card usage while maximizing financial gains.
While credit cards can offer numerous benefits, it’s essential to acknowledge some negative aspects and potential pitfalls associated with their usage. It’s crucial for freelancers, to be aware of these drawbacks to use credit cards responsibly. Here are some negative facts to consider:
High-Interest Rates: Credit cards often come with high interest rates of up to 55% per year for outstanding balances. If users do not pay their full balance by the due date, they may incur substantial interest charges, leading to mounting debt over time.
Debt Accumulation: Easy access to credit can tempt some freelancers to overspend beyond their means, leading to debt accumulation. For freelancers with irregular income, relying too heavily on credit cards can result in significant financial stress and difficulty in paying off debts.
Credit card companies often set a minimum payment amount, which is typically a small percentage of the outstanding balance. While paying the minimum amount may avoid late fees but it still attracts interest rates, it can lead to prolonged debt repayment and increased interest charges.
Credit Score Impact: Irresponsible credit card usage, such as maxing out credit limits or consistently carrying high balances, can adversely affect an individual’s credit score. A lower credit score can limit access to favorable interest rates and financial opportunities.
Hidden fees: Some credit cards may have hidden fees, such as annual fees, balance transfer fees, or foreign transaction fees. Users need to read the fine print and be aware of any additional costs associated with their credit cards.
Minimum Payment Trap: The company gives you the option to pay a bear minimum amount to money to ensure that you are going to pay the rest of the amount of money at your convenience with all interest rate
Conclusion
For every Indian freelancer, a credit card is more than just a financial instrument; it is a key to unlocking a world of opportunities. From seamless transactions and efficient cash flow management to building a positive credit score, the benefits of owning a credit card are undeniable.
By embracing the advantages that credit cards offer and using them responsibly, Indian freelancers can navigate the financial challenges of freelancing with confidence, ensuring a prosperous journey in their independent careers. Happy Freelancing!
