As Traders, we all should know the value of money management, because without risk management and money mangement, trading can be futile. In this section, we will post articles periodically about money management techniques which can make a BIG difference to your Financial Health.
All You Should Know About Credit Cards
Credit Cards Demystified!
It has become hip these days to flaunt a credit card. You can see everyone flaunting it these days. Even kids have one these days. Gone are the good old days when people used to save up for the things they desired. It has become the epitome of the Internet age. No wonder there are so many impulsive buyers out there on the streets ready to gobble up anything and everything on offer. We cannot dispute that the Credit Card though is sometimes useful in making online purchase of Train Tickets and other useful things which cannot be done by erstwhile cash in hand.
Having a good credit card repayment track record can take away some hassles in processing of loans. You can end up getting a loan faster that way. So we would not suggest you dump your credit card into the dustbin just yet. Rather using your card with discretion would be the right way out of this deadly debt trap which is fast getting hold of many a household across India, and as you might have read so many articles in newspapers across the Country about people who out of utter despair and inability to pay their debt back, with credit card agents chasing them,lost their lives in the process. Below are listed some common mistakes people commit and how they can be overcome.
I NEED to buy it absolutely.
There is a very thin line between “need” and “want.” Many people confuse their needs with wants. Before any impulsive purchase, pause for 2 minutes and try to convince yourself that it is an essential need before you make that purchase. One good adage that might help you in this scenario would be “if you do not have the cash, do not buy it; buy it when you have the cash with you.”
Making the minimum Amount Due would be just fine.
YES. It would sure be fine for the Credit Card Companies and their Balance Sheets, not for you though. Many people do not know what they are in for if they just keep paying their minimum amount due.
Suppose you have a credit card limit of Rs. 10,000 and you have used all your limit and you keep paying your minimum due amount, calculating the interest at 18% per annum, it will TAKE YOU APPROXIMATELY 20 YEARS TO FINISH OFF THAT DEBT.
Yes, it may sound strartling, but that is the ground reality and many of us do not even know about it.
Making late payments is fine.
NO. A single day delayed payment can attract a late-payment fee of Rs.200- Rs.600 depending on the Banks which issue the Credit Cards. This can hugely add to the burden you are already carrying. If you have a salary credited into your bank account and you have trouble figuring out the dates when to pay your bills, try ECS (Electronic Clearing SYstem) for a change.
I can settle it once I get that promotion or once I finish this deal.
Counting chicken before they hatch in the case of Credit Cards can be extremely injurious to your financial health. With new increments and new business deals come new commitments. So plan accordingly and avoid stretching your pocket and find yourself in a dire circumstance.
Credit cards if not used wisely can make your life a living Hell. If you are not using one and were thinking of getting one, it would be worthwhile to forgo that decision. For those who are already in this vicious cycle, it is highly recommended that they wean themselves off the excesses before it gives them sleepless nights.