Of course, a credit card is an awesome friend when in need, but if you don’t use it properly, then it could turn into your biggest foe too. Practice caution when using a credit card – they’ll all tell you this. If you don’t, then you can say hello to a damaged credit score and a lifetime of debts. Okay, don’t get all freaked out now. Unless you fall under one of the types mentioned below, you’re likely to handle a credit card prudently.
The Spendaholics
Spending money without thought isn’t really a healthy habit. So, dear spendthrifts out there, due to your lack of financial stability, you shouldn’t get yourself a credit card. Why, you ask? Well, a credit card increases your purchasing power and, hence, it is a weapon of self-destruction for someone like you.
Also, people who exhibit extravagant spending patterns are likely to max out their card. This credit-hungry behaviour will eventually turn off lenders and the prospects of them getting a credit product will decrease.
The Credit Revolvers
While it makes sense to pay just the minimum amount due occasionally, it shouldn’t be a habit. Do you know how much interest is applied on revolving balances?
Revolving credit is actually a subtle debt-trap if you think of it. Even if you pay your bills on time, if you are the type who never pays your outstanding balance in full, you are just accumulating a lot of interest on the unpaid amount. And this keeps increasing on a month-on-month basis. In short, you’re just shelling out a lot of your hard-earned money on paying back your credit card dues. Sigh!
The Disorganised Bill Payers
Often miss paying your credit card bill? Or never make your payments on time? Well, you shouldn’t be having a credit card in the first place. Missing a credit card payment or delayed payments attract high interest along with the penalty for late payment. This means you’d end up paying way more than what you actually owe. And that’s not all, these missed payments and delayed payments will reflect in your credit report, thus bringing down your credit score.
The Addicts
Do you often find yourself reaching out for your Credit Card to pay for every little thing you buy? Well, you’re basically welcoming long-term debt with open arms. A Credit Card isn’t a tool to fund your everyday expenses. Rather use your card wisely – to fund purchases where you can get cashbacks, discounts or just enjoy the convenience of EMIs coz you don’t have enough in the pocket to pay upfront.
The Negligent Ones
“Oh, did you lose your wallet again, Bob? Well, that’s the third time this month.”
Bob is careless, we tell you. He either loses or forgets his wallet – he’s even once left it on the restaurant table after paying the bill (duh!) – all the time. Well, it’s usually not a big deal coz he doesn’t carry much change, so it usually ain’t much of a loss monetarily.
Careless people like Bob should not get themselves a credit card. Imagine forgetting your card, say at a store, and then someone steals it. You’re practically doomed!
The Non-Users
Throughout the article, we discussed different kinds of people who’ve been managing their credit card the wrong way and, hence, don’t deserve it. This one is for those of you who have a credit card just for the sake of having one (or just coz everyone has one). While overuse or wrongly using your card is financial hara-kiri, having one and not using it annihilates its advantages.
A credit card is a great tool to earn discounts and rewards, thereby helping you save big on your purchases. If you aren’t going to utilize its advantages to the fullest, then it’s better that you just stick to your debit card.
Final Thoughts
A Credit Card is like a double-edged sword. Use it wisely and it will be like a friend with benefits. But use it wrongly and it will be like that obsessive, over-clingy ex who’ll suck the happiness from your life.
Sanesh Mathew - BankBazaar.com is an online marketplace for loans, credit cards and more.
______________________
0 facebook:
Post a Comment