The demand for credit card have been soaring and people are also buying more & more products on EMI .
However , those who have taken credit card have at some point of time advised others not to actually have a credit card .
Today, we’ll look into how a person who wants to have credit card went to the situation where he don’t want to have credit cards and finally reach to the conclusion whether to actually have a credit card or not ?
The Temptation
The credit card game not very easy to master. It’s quite complicated due to the unclear T&C’s or the devil in the details things.
The Credit cards are segregated based on their benefits.
These benefits tempts you to buy them.
The credit card are normally segregated into :-
- Lifestyle
- Rewards
- Shopping
- Travel & Fuel
- Business
Everyone wants to have access to premium clubs , lounges , golf course along with great cash back deals , travel offers & amazing rewards.
Along with above, interest free credit period , No-cost EMI , Gift vouches , Credit limit 2-3 times of monthly income tempts someone to have a great credit card.
Given the benefits offered like in some cases you’re able to earn more 3% on your expenses which is the saving interest these days, no doubt one would say no to a beautiful candy even if their stomach is full.
The Start
Normally Credit cards are issued free of Joining fees or annual fees which makes them very lucrative.
However, in case where there is joining fees/initial fees then it is reimbursed through host of vouchers which is available on spending certain amount within fixed period of time.
Thus, it encourages spend at the inception only.
Everyone will start small , buying groceries , movie tickets, paying telecom bills, Gas bills , insurance bills etc.
All the spending let’s you earn either vouchers, rewards points or cash backs.
However, you’ll always have your eyes on earning more cash backs/reward points or vouchers.
The Distraction
After you become comfortable with basic spending you’ll focus on premium stuffs like dining experience , home appliances , phones , TV etc.
This is because you’ll be rewarded for purchasing things you actually don’t need at some times.
You’ll be asked to spend certain amount of money in a fixed time frame to earn more rewards/cash backs and if the limit is somewhere there you’ll actually spend.
Once this covid phase is over you’ll definitely receive great offers from travel or entertainment industries.
Also, there are offers which run of new products the most noticeable being on One plus or Apple products where you’ll get cash back on buying the product along with No-cost EMI option.
We’ve seen people actually fell to such tricks . This is not bad on the part of business
So at some point of time you’ll buy things which you’ll actually not buy with instant money.
Eventually you’ll be spending more & more to earn cash backs & rewards.
Is Credit Card are really bad ? Whether to Actually have a Credit card ?
Warren Buffet is not fond of credit cards because he knows it is difficult to stop temptation.
However, Credit Cards are not actually bad if you have :-
- The Right card based on your need not want ( Since Credit card can be highly rewarded ), and
- The power of ignorance ( Able to ignore even the juiciest of offer)
You can also set lower spending limit on credit card instead of higher limit given by the banks so that you think twice before spending more.
Hence , it is important to do analysis of your expenses before applying of credit card so that you don’t apply for the wrong card.
If you don’t spend on high end things don’t go for annual fees credit cards since they will make you spend more to actually get the benefit.
Simply put, credit cards are not bad if you have the right card , right mindset (control) and right spending pattern(balance).
In case you want to read on credit cards than you can visit Cardexpert .
You read more on Personal Finance here.
