What's your thought about credit cards? Do you consider them a banking fraud, just to trick you to spend money you don't have, or a useful tool if used correctly? Do you have one yourself? In my case, as a student, I was issued a university card, which features a low yearly fee but also a considerably low credit limit. However, I often use it to pay bills in interest free installments (Car insurance for instance) and my gas expenses, which provide a decent cashback (I'll fill up my car once or twice a year for free).
On the other hand, there are quite a few shops here that also offer interest free installments, that way, I was able to purchase a bicycle for my girlfriend, when the budget was quite limited.
The trick on credit cards is to use them wisely, not spending more than you can afford, always pay in time, otherwise you'll get a huge interest on your balance, while at the same time, you're building a credit score.
What's your take on this? Are you against credit card usage?
This is a good question. For me, a credit card can either be a form of trick (not really a scam) or a tool depending on how you will use it and how you will view it.
Most people particularly those who are working have credit card/s. This is often issued when you have a good record in financial aspects such as having no records of deferred credit loans, having a stable and high-paying job, or having a good amount in your bank account. The credit limit increases as often as you use it and if you pay diligently. For other people, it is a form of scam from the banks to gain more profit because people are too blinded with what they seem a good offer. But actually, this is just like any other business there is. Of course, they still have to make a profit out of their capital, hence the justification of interest rates that they have for every loan you make.
I must say that this is a very good business idea from the central organization because they address the demands and needs of their clients in order to benefit from it. You see, people need and love money. Some are even blinded by it, that is why it is a good business strategy to offer something you know they can't resist. The time people would give in is the moment of winning for the banks (most especially if the person to who they offered credit cards is not really wise in handling the financial aspect). People who are too carried away with the benefit of having a credit card mostly end up spending it on nonsense matters, hence as a result they end up having huge debts to pay for.
But to others, like me, I view it as a tool. An important tool that could help you get by and even make you a profit. It just boils down to how you will use it. You see, there is a thing called good and bad debt. Bad debt is something that you took a loan for but won't make you a profit. In short, bad debt is a luxury. Meanwhile, good debt is something that if you take a loan for it, could benefit you and could possibly generate you an additional income. For an instance, when you pay your bills using your credit cards. The act of paying your bills is your responsibility, hence you used your credit card right because after all, paying bills is inevitable and you have to do it to avoid cutting of services. In this scenario, you have avoided the inconvenience of paying thru service centers at the mall and at the same time the inconvenience of possibly having a disconnection. In addition, you also earn a credit limit here for paying your bills. It's a win-win scenario for you - you have paid what needs to be paid and earned points that you could use to reward yourself or pay for anything important in the future.
Another example would be buying and selling using a credit card. This is so far one of the best ways on how you could utilize your credit card. You can buy anything which is in demand like gadgets or appliances and then sell it with a little additional price as your profit. This could really generate you money because most of the time, purchases made using credit cards have discounts and have 0% installment fees/ interest rate (depending on the company of your credit card). This way, you could earn and you could earn points again which is an advantage on your part. Or if the risk of buying first without a sure customer scares you, you can do a pre-order of items so that you already have a sure customer and sure sales.
The bottom line is that people are in charge of how things will work in their favor. If you aren't disciplined enough, then I guess you will paint credit cards as something so bad because it brought you "hell", not focusing that it was actually your own doing. Or you could view it as a tool that could give you additional income and convenience because you use it right and not impulsively. The answer is in your very own hands, so decide accordingly. Just a friendly reminder though, if you really want something but you can't afford it yet, and you know it won't really be a money-maker to you, then just save until you can buy it. You wouldn't want to be bothered and anxious about unpaid balances that keep on generating interest, do you? Spend responsibly, everyone.
