Apr 02, 2018 05:08 PM
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There are Credit Cards and then there are Creditors. To differentiate between the two Credit Cards - were known more popularly as Plastic a few years back and Creditors are those people to whom we owe money. In this instance, you are the credit card and the credit card bank is your creditor.
Now that this bit is out of the way lets look at what Credit cards Do, the good, the bad and the ugly all in a space of 500 words or maybe a little more.
Credit Cards can be a blessing, when the going gets tough and when one hits a rough Patch. Whether it can remain a blessing or turn into a curse is all in the hands of the Credit Card holder.
It sure can be a major Financial Helper in times of crisis, such as when a loved one is rushed to the emergency room and its that time of the month, when cash is either running low or run out of your pocket.
A golden rule that I personally follow is - never trust the credit card mantra of paying in Installments. If you are one of those who goes on a shopping spree and swipes the credit card as if the world would end in the next hour or so, then you surely are those gullible ones who think that paying in Installments is a magic mantra. You end up paying a lot more than you spent and would then wish for the world to end before the credit card payments suck the life out of your finances.
A tip here - whenever you use the credit card, you have a 30 day interest free period within which you can repay what you spent without adding an additional rupee. This again depends on the billing cycle of the credit card bank. Most international Credit Cards billing cycle is 1 to 30 of the month. If you shop on the first day of the billing cycle, you can enjoy an interest free credit for 29 days, but make sure you pay on the 30th day to save on interest. In addition, you can earn interest on the money in your savings account which you replaced with the credit card at the start of the billing cycle.
Another tip - Discipline is the key to financial health. If you want to ensure you do not get into the whirlpool of never ending credit card payments - make a promise to yourself to use the credit card only in emergencies followed by payments to the credit card bank in a timely manner.
Last but not the least - remember there is no such thing as free lunch in this world. The profit model of a credit card company is to lure you into their never ending minimum balance payment. This will hurt your financial health real bad and you may just end up dipping your fingers into your future planning funds.
Remember the saying of yore . living life on credit cards maybe fun, but a nightmare in the long run.
