Credit Card Boon or Bane?

CNBC: “What is the one thing that young people should be doing about money?”
Buffett: “I tell them two things, generally. One is stay away from credit cards… The second thing I tell them is to invest in themselves.”

Credit Card is one of the finest inventions that man kind has ever made. Sounds crazy!!! This is what every new credit card owner thinks. The very moment he/she acquires their new Credit Card say with a balance of 50k they think someone has gifted 50k to them. Few others who are little calculative think thru credit card they borrow money. The second category of credit card owners would least suffer the credit card impact. But in my opinions most of them (atleast 80 to 85%) will sometime in their life will feel the negative impact of owning a credit card.

Credit Cards are good to people whose balance is paid by an external source (offices, businesses etc). If you have to pay it from your pockets you are prone to feel the pain one day. It is never the same soothing words when you were called to sell a credit card, when you fail to make payments. Why will I miss a payment? I will see to that I make all my credit card dues in time. This is what everone thinks while they get/apply a credit card.

I have some points for you to know why you will end up in a mess with a credit card. It all starts with your calculativeness. You would purchase grocery for a sum of 2000 every month. Once your credit acrd comes you will start purchasing thru it. Now you will buy thru your credit card and you will slowly realise your monthly grocery spend is increasing. How? you will have a discount on shampoo if you buy two. So instead of buying one you will buy two and pay for two. Though you get one extra, your budget for that month jumps. It actually adds up like this starting in small numbers and one day you will realise its gone beyond your hands. SALE!!! SALE!!! SALE!!! this is where you got to be really careful the place that eats up your credit card balance. Logic is very simple impulsive buying leads you to over spending.

It will look like your lifestyle has gotten better after the arrival of your credit card. But in reality the credit card you up slowly and pushes you to a miserable starts. What happens if you dont pay? Beyond the negative financial impact the mental agony and trauma is something that will be more painful in credit card deals. You will be forced, cornernered and sometimes even threatened to pay the dues. Banks have professionals (stands for other kind of professionlism) who knows the way and means of collecting money from you. The recent trend convert it to EMI and pay or make it a personal loan is the most dengerous to do in credit card deals. Personal Loan is something you should be getting while you need it. It should not be forced on you.

There is only onething you can do to avoid all these pain and trauma. Its better to live with what you have and a well budgetted life than a life with dues and loans.