Ka Ching : Spend the money that we don't possess. Review on Credit Cards Financial Help or Financial Hurt

We live in a greedy little world-

that teaches every little boy and girl

To earn as much as they can possibly-

then turn around and

Spend it foolishly

We've created us a credit card mess

We spend the money we don't possess

Our religion is to go and blow it all

So it's shoppin' every Sunday at the mall

Shania Twain got it right this time. She aptly describes what a credit card can do. It can help you. It can wreck you. It can change the way you live. Actually it doesn't do much. You are the one who let it affect you in a positive or negative way. I sometimes wonder why in the world do we need Credit Cards. The very concept of a credit card is quite intriguing. It lets you spend the money you don't possess. Then you have the option of paying back in installments at an interest rate of around 30%.

I know this topic has been to death by my esteemed colleagues at MouthShut. Still, I want to talk about it because I have nothing else to do this evening.:)

Of course it is very convenient. You just show the plastic. The mall is all yours. Sometimes you don't even look at the amount on the bill. You let the credit card take care of everything for you. Come month end, you are surprised to see how big a sack of potatoes you need to pay back those fellows. If you cannot pay the amount in full, you have the tempting option of just paying the minimum amount and let the amount rollover to the next billing cycle. What you might not see is the 30% interest rate applicable to these rollovers.

Credit card companies do not make any moneyif you pay them back in full every month. So they lure you into the snazzy world of installments. Once caught in this web, it is very difficult to consolidate your debts and come out debt free.

I had an ICICI card and a Citibank card. I was the object of ridicule amongst my friends because my Citibank credit limit was only 20, 000 whereas the rest were enjoying a 100, 000 Rs limit. Nowadays I don't even use these cards. I use my debit card to make purchases and keep a tight control on my expenses so that I don't exceed my monthly available income.(monthly income - savings part) Of course for big purchases, I always go for a personal loan which has far less interest rates than these credit cards.

I agree that it all boils down to one's lifestyle. Some do need the credit card. However most don't need it but use it just because. just because. If you want the comfort of plastic money, use your debit card/ATM card. If you want to *spend the money that you don't possess, *take a loan. Life will be simpler that way.

Remember the Visa ad? *If there's sky above and ground below, all you need is a Visa card. *I want to add a couple of words to this. With a Visa card you need some restraint too. Otherwise you will end up in a mess. Nowadays I keep the following slogan next to my computer.

There are some things money can't buy. For everything else, my salary isn't sufficient. Just forget it.

These are all opinions from my personal experiences. The usual disclaimers do apply. Comments welcome.