Wednesday, April 20, 2016

Give credit where credit is due

Many of us can't imagine our lives without credit cards. Almost without thinking, we take it out to pay for purchases from groceries to gas. With the advent of internet transactions and online shopping, the credit card has become indispensable. I use mine to book and pay for airline tickets, movies, insurance as well as online purchases.  Services such as Uber is totally cashless and you need to have a credit card to use it. So can we live without it?

When I was younger and starting off in my career, having a credit card was a status symbol. It was considered a major achievement to show a salary slip that was high enough to be accorded the most basic credit card. Then there came the gold and platinum versions, and now the black and stainless steel ones.

Credit cards have become so ubiquitous that practically everyone who opens a bank account is handed one. Stores hand them out like candy. All the banks are interested in are customers who spend a lot and rack up debts. Which is what lands many young people in financial straits because they can’t manage their finances.

Some years back, I was appalled when a young staff member told me he had bought the latest mobile phone that cost more than his monthly salary   When I asked him how he paid for it, he blithely replied, "on my credit card, of course".

I was also surprised when I found out that my friend, F, has credit card debt. She is about my age, retired and as far as I know, financially solvent. But she says that when she has charged a substantial amount to her credit card, like on a holiday, she won’t pay the amount in full, opting instead to pay the minimum amount and incurring service charges.

I, for one, am always prompt in paying my credit card bill. I practically have a phobia about late payments. That’s because I was burnt before by credit card debt. It was so easy to chalk up all my expenses on the credit card. I even took out cash advances. It came to a head when i couldn’t even make the minimum payment on the amount outstanding and had to meet with the credit officer to structure a repayment schedule. Of course the credit card itself was suspended. That taught me a lesson and I also cut up my remaining cards. From then on, I told myself that if I didn’t have the cash to pay for something, I wouldn’t get it.

In time, of course, I got a few new cards. For free, which means I don’t have to pay a fee for its usage. I do use them, but very cautiously. Undoubtedly, credit cards do come in handy, especially when traveling and you don’t want to carry so much cash around. I use it to pay for all my online purchases and also major purchases in a foreign country.

I've had to use my credit card for my son, B's school fees when he was in high school and university. Money was tight, but rather than get a loan from family or friends, I figured I would rather owe the bank despite the high interest rate.

With internet banking doing away with so many cash transactions, it's easier than ever to just rely on the credit card instead of using cash. Some of my friends swear that it helps them keep track of their expenses. They just look at their credit card statement to track their spending.

I admit that I'm still a little old school and use my credit card sparingly. With so much fraud going on, I'm extremely jittery about giving away financial information. I checked out a nearby gym the other day and was informed that they only accept monthly auto-debit deductions from my credit card. Even when I offered to pay cash upfront for six months, they demurred and said it was company policy.

It’s already hard for me to keep up with new payment modes like online transfers,  and I break out in a cold sweat when I’m confronted with ticket machines at malls, and self-checkout counters at supermarkets. What do people without credit cards do? Hasn’t it become more of a hassle now than help? When did life become so complicated?

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