Your Personal Financial Adviser

A credit card is a rectangular plastic piece with a chip on it that allows you to purchase goods and services without paying on the spot. The payment is made by credit card Company which makes you indebted to them and you have to clear the debt in a pre-specified time period or you will be charged interest on the balance.

• A credit card provides you so many facilities that a person gets tempted to buy one. These include:

• You can purchase goods and services whenever and wherever you want without having to pay the cash then and there, i.e. you can pay the balance later on.

• You are not forced to make complete payment in one go; it’s your choice if you want to carry forward the balance.

• If you need cash somewhere, credit card grants you the facility to withdraw money from ATM machines.

• You can transact money from one currency to other using your credit card; and if your credit card is international you can enjoy its usage even in abroad.

• Offers like baggage loss, insurance on accidents, reward points on card usage etc. attract the customers.

• They allow accurate book-keeping by reducing the purchases record to one monthly bill statement.

• Credit card grants you the power of remote shopping, i.e. ordering for goods online or telephonically and if you find the goods purchased defective, you can withhold payment to the merchandise by consulting Credit Card Company.

These are the great features of credit card that advertise it as a boon, but there’s a dark side also. There are limitations attached with almost all the features which you come across when you use it and that means you will have to suffer at least once. Here are some of the limitations which you must be acquainted with.

• In most of the cases it has been seen that credit card possessors overspend. More is the card’s limit; more will be the monthly expenses.

• For people with more than one credit card the situation is even worse. They spend and spend and when they cross one credit card’s limit they start swapping the other one. At the end of the month, they receive a bill statement totalling thousands of dollars.

• The interest rates, i.e. APR charged on the balance amount is usually higher than normal rates in banks. This makes credit card usage an expensive practice.

• If your credit card is lost or you give your credit card number to a dishonest salesman, you may land up in a serious problem and may have to face a great loss if some timely action is not taken. Moreover, credit cards are found to be prone to maximum frauds.

• It sounds good that your credit card allows you to withdraw money from ATM machine for situations when you need cash. But you may not be aware of the fact that there is no interest free period for this amount. This means you are charged interest immediately after you have withdrawn money.

Using a credit card is not an offence, but it should be used wisely and carefully. Use whenever it is required but don’t be a credit card-aholic. Wherever possible, use cash for paying your bills because more will be the credit, more will be the interest on it if you fail to clear the balance in interest free period.

Be Sociable, Share!

•