Credit Card Trap

Many people start using credit cards without understanding how actually it should be used. Although the Banker or Agents who provide the card explains everything, but who cares to listen to them and most people get into the trap. A credit card is very beneficial if used properly however it is extremely disastrous if you miss making the payment in full. Therefore, it is important to learn how to get benefits in our favor else dropping it all together making more sense.

A credit card works on basically two principles, one "buy today & pay later" and second "liya hai to chukana padega!" Being a credit card is an unsecured loan therefore rate of interest is extremely high and could be 40% - 50% p.a. And that is also a prime reason Bank provoke to use a credit card because they know the human tendency & psychology of people very well. The Bank never gets profit when the entire outstanding amount is paid in a lump sum on the due date because that remains interest-free. The more you default the higher Bank will charge the interest. The rollover debt trap can ruin your entire savings in months. 

Now whether you should use a credit card or not, before taking any decision just go through the following checklist:

Go with a credit card if:

1. Can you control your temptation for window buying if cash is not available and you have only a credit card to swipe? It means no buying at all unless you can arrange full payment before the due date.
2. Are you capable to make full outstanding payment at one go before the due date?
3. Are you a disciplined person who aware of your current financial status?

Don't opt for a credit card if:

1. Are you a person who prefers to avail EMI for most of the things irrespective of interest charge?
2. Your attitude is like 'spend today & save later'
3. You prefer to enjoy today at any cost.
4. Are you paying the minimum amount due on your existing credit card, if any?

Credit card is not bad at all, only you learn how to control your emotions. I have been using a credit card for 20 years now without any single rollover of the amount and I pay the entire outstanding amount in full before the due date. A lot many benefits/points/discounts are associated with credit cards. Always remember, it is easy money available to you, and you pay in full or part, with or without interest, that totally depends on your payment habits & your psychology.