Credit card – a boon or a bane?

 

In the current financial fiasco, if you don’t know how to handle your finances, you’re sure to land up in trouble. One of modern finance’s greatest innovations has been the faithful credit card. This small piece of plastic in your wallet or purse can be a blessing or curse, depending on how you use it. Surely, having a credit card may feel good; it not only lets you buy whatever you want whenever you want, but also gets you rewards at times.

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But is it really such a big boon? A flexibility to buy stuff now and pay for it later? Or a hassle to keep a track on every little expense? I for once, am against credit cards and I have my reasons, but one of them is the exorbitant interest rates.

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Having a credit card could tempt you to shop when not required

Having a credit card could tempt you to shop when not required

Making big-ticket purchases is easy with a credit card. But when it comes to paying the monthly minimum, although it may seem convenient but your principle amount remains the same next month which won’t let you enjoy your shopping. Then there is another point that all pro-credit card people can boast about – the insurances. Several credit cards offer free insurance that usually covers accident-related-hospitalisation. But you could be tricked here, it’s important to carefully read the offer documents and ensure you have adequate cover or else you’ll end up having to pay 70 per cent of the hospital bill from your precious savings.

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Another bother that comes with owning a credit card is the revolving credit. Yes, I know I’ve been there too. Monthly roll-overs do affect your next bill cycle. It’s always better keep a track on your billing cycle; if you have only made a partial payment the balance will reflect on your next month’s statement. So always pay the entire amount lest you want to end up paying a 50 per cent annual interest on your outstanding amount.

 

Be mindful of the interest charged on your credit card and pay your monthly minimum on time

Be mindful of the interest charged on your credit card and pay your monthly minimum on time

So I guess the scale remains balanced on nothing but thin air. Even though a credit card looks like a good budgeting tool, it has its share of hidden hazards. The ball is in your court. Be safe, not impulsive; have control on your expenditure; keep regular reminders for payments, and last but not the least do not misuse your card as it will only give you a reason to worry later. For now, take care of your financial health and avoid any meltdowns. So long!

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