Credit cards, credit cards, credit cards…what thou doeth to me!
I swipe and swipe and swipe while thou mount my debt; slowly and oh so clandestinely.
I pay tribute to thee and place thee above all my liquid monies whilst thou pay tribute to my enemy (debt) and
overwhelm me in its avalanche.
I endure to make thee happy whilst thou leech away all my greens (money).
I sing this in melancholy, “Oh credit card, why thee doeth this to me?”

 

It’s a well-known fact that since the invent of the ‘pay-later’ concept as advertised religiously by issuers of credit cards, many people have taken delight in carrying out their financial transactions through this medium. This delight however took form of displeasure as the seriousness of the risk of debt started dawning.

Credit card-my new best friend! Why credit cards continue to be in vogue…

Nikhil Singhi

  • Keep calm and pay later.
  • The swipe rush: A sense of rush passes with a single swipe, electrifying one’s mood. Somehow, all the financial constraints look distant and conquerable. The world looks brighter A false sense of achievement of owing without paying establishes. This urge soon becomes a habit and ultimately a necessity
  • Have no cash? Worry not: With credit cards in pocket one is relieved of the ‘pain’ that comes with biding adieu to cash in wallet. The fear of losing money or having to compromise just because of insufficient cash in wallet seems courted.
  • Rewards: Certain credit cards give incentives or rewards for the amount of money spent with it.

Entrapped with debt:

  • One must understand that even though credit card allows us to conduct the transaction without having to pay instantly for it, it still does not change the fact that credit is like anyother loan which has to be repaid back someday. May be not today, may be not tomorrow or the day after but someday; someday one will have to repay. The longer one delays its payment, the deeper it drills a hole into one’s pockets and the deeper the debt becomes.
  • The urge to swipe can have harmful consequences if desire takes over financial discipline. When this happens, swiping is resorted to make insignificant purchases which could’ve been transacted by paying in cash as well. The amount due thus keeps increasing and when combined with inability to repay, contributes to debt formation or debt strengthening. Thereby, one willingly becomes a contributor of one’s own debt trap and becomes guilty of it.
  • It’s a well-known fact that paying the full amount due each month saves one from bearing the load of interest payments. However, many people overlook this and engage in transactions which may seem easy to pay in the beginning of the month but which may seem impossible at the end of the month. The debt, which is a borrowing on future income, grows.
  • The option of minimum repayment gives a false sense of security. If one pays only the minimum amount due and continues making purchases, one is only increasing the debt. The next time one will not just have to pay the previous amount due but also the interest on unpaid amount, late fee (if any) and the new amount due (on account of purchases made). Therefore, slowly and unknowingly one falls into the debt trap.
  • The practice of carrying on the debt has impact on one’s credit score too thereby hindering future request of seeking loans.
  • The practice of making use of credit cards to pay off debts on other cards is deadly. It gives a false impression that one is moving in the right direction towards repaying back one’s debts consistently but unfortunately, all that one is doing is shuffling one’s debt around. In the end, one only creates debt while paying off debts and juggles with these debts as one enters into a cycle whereby majority of the earning goes into repaying the debt.

Nikhil Singhi

In all probability, credit cards necessarily aren’t bad, but when used as an instrument of financial indiscipline affecting financial health, it becomes dreadful. This likely tends to result in achieving financial goal set for the year a distant cause as clearing the debt becomes the latest motto of the year. Therefore, it’s only logical to think smart and act smart and to stop showing negligence towards a situation that may arise in future on account of actions committed in the present which may have adverse impacts.

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