Credit Cards - Can You Handle The Responsibility
What
often comes to mind when you hear the phrase, "Don't
leave home without it" is the old American Express
advert that many of us can still remember.
Today, many people would not leave home without a number
of things: their mobile phone, business card, or credit
card! Your mobile phone allows you to stay in touch with
people; Your business card tells the world who you are,
or rather who you think you are! Your credit card can pay
for both mobile phone and business card!
So why do many think of credit cards as such bad things?
Credit cards are one of those things that you either love
or hate, but in themselves they are neither good nor bad.
Credit cards are simply tools, a modern day invention,
a little plastic card bearing an account number assigned
to the cardholder that can be used to purchase goods and
services on credit. It simply indicates that the cardholder
has been granted a line of credit. These days they are
even accepted as evidence of the holders' identity.
Like any tool, it's how they're managed that determines
whether they end up hurting, or helping you. When used
properly they can flexible, convenient and extremely useful!
Their main advantages are:
· They
are a safer alternative to carrying cash.
· When
used responsibly, you build a good credit history and
· They
can be helpful during emergencies.
On the other side of the coin, it's very tempting to whip
out a piece of plastic at a moments notice, which makes
them rather dangerous for some people. ...And, because
they don't feel like money, there is a tendency to over-spend.
Sadly, about 60% of cardholders carry over monthly balances,
which can lead into debt.
So using credit cards comes with a responsibility that
as individuals you have to decide whether you can or cannot
handle! Much depends on the holders' knowledge and understanding
of financial issues, financial acumen and tolerance of
perceived risk.
What I find exciting is that credit cards companies have
been falling over themselves to give out free money in
their lust to compete with each other and get a bigger
slice of the market. So with a decent credit history, it's
unnecessary to pay them any interest especially when many
card companies are willing to lend to new customers at
0%. Some major providers will even pay the money directly
into a bank account.
It's hardly surprising that a lot of people who've paid
interest in the past have decided it's about time they
used this money to their advantage! In a many of cases,
these consumers have been able to use their credit worthiness
to position themselves much more advantageously without
needing to spend more money from their own coffers. Many
people have admitted to buying their first property using
money from credit cards.
As consumers, it can be beneficial to extend our thinking
to accept the advantages of managed debt, despite the disadvantages
of consumer debt. Instead of rushing out to buy the latest
fad or hi-tech gadget using your credit card, wait: Could
you use it more advantageously?
Anyone choosing to play the credit card game should educate
himself or herself beforehand. It requires some level of
discipline. Following are important hints one needs to
know about credit cards to play the game successfully.
1. Be disciplined, not forgetful or inattentive.
2. Note
the expiry date of 0% "introductory offer"
3. Set
up direct debit for minimum monthly repayments
4. Never,
ever spend on a card after balance transfer
5. Payment
protection insurance not needed
6. No
cash withdrawals!
Better still, what can you do with the money when you
have it? Find yourself a good wealth coach to help you
devise a workable solid financial plan. That's a millionaire
habit.
All said and done, if you had to choose between your mobile
phone, your business card and your credit card, what would
your answer be?
by Margaret Ntifo
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