Tuesday, July 21, 2009

Don’t bank on credit cards

Credit cards have been playing havoc with the lives of people. Several families have been ruined. It’s a surprise that banks are not being punished legally and firmly for pushing loans to those who cannot afford to repay.
No wonder, at one time the Dubai police chief called for easing of regulations as the emirate’s jails were getting filled with people guilty of issuing bouncing cheques. Can you believe this? The UAE is estimated to have Dhs20 billion as outstanding payments on credit cards.
My own brother, who earns a very moderate salary in Mumbai, ended up with so many credit cards, he is now selling off his only house to repay and move on rent. He says he took one card to repay another, and another and another…Well..
“I am up to my ears in debt,” cried another victim to me.
Many refuse to live within their means. My appeal to at least those who visit this blog (you are my near and dear ones, I swear): Plzz, never allow this materialistic monster, credit card, to trap you.
Shucks, why are we getting serious? Let’s pick up a credit card joke from the Net: A man said his credit card was stolen but he decided not to report it because the thief was spending less than his wife did.
PS: Until today, I do not have a single credit card. Do not know about the future.

22 comments:

  1. humm, i too have never had a credit card until recently, when my wife was carrying. I took one for emergency, in case i had to have any hospital visits or sudden need of cash.

    Very well said. Credit card is an evil, but one could tame it. Have just one card, and never use it, unless some emergency. Thanks for this.:)

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  2. I totally agree.I was helping my husband get out of this trap. We are almost done paying for them and intend to lock all of them, to be taken out only for an emergency...

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  3. Your are one in very few in Dubai who don't have credit card.Here cost of living is growing so high and one is forced to use the credit card.One should wisely use it and make the payment before the due date,then i don't think there will be any problem of having credit card :)

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  4. I use credit card because then I have to carry less cash, not as a financing instrument for things that are beyond my pocket. :D

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  5. R., ha! Well it could go either way because you never know who can resist credit card temptation the most. Good advice. I got rid of all of my cards many years ago...now I have a few. They cause me both stress and relief-I think you learn a lot about your spending habits when you carry credit cards. Also, they come in handy when you work on contracts and get paid, unevenly, throughout the year. I have a friend who uses a credit card for all of her expenses, and then pays it off every month. She accumulates miles that way and can travel a lot. Good topic, R., one I have also thought about. <3

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  6. The joke you've shared in the end is nice :)

    Even I don't have a credit card and I'm not interested to take one in future cause my ATM cum debit card keeps me happy :)

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  7. thats was insightful and profound..thanks..even i dnt carry a credit card..till date i dnt have one..neither do i intend to carry one in the near future..but then as debt future too is unseen, but then, if that is really the case with your brother, its sad.

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  8. We use ccs for emergency purpose only...like buying online tickets...even i felt sad reading about your brother...

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  9. Earlier, the limit on credit cards were your bank deposit. All this started spiraling out of control when the credit card eased the restriction of having a bank deposit. It have helped many. But it has also proved to be a bane of others.

    If you have to swipe, use your debit card instead unless you are balancing wizard!

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  10. Watch the program listed at http://www.pbs.org/wgbh/pages/frontline/shows/credit/
    for the secret history of cards!

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  11. LOL funny credit card joke ;-D great post! Thanks

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  12. I do have several CC but I use only one and am very clear about the payment.

    But yes u r totally right, they are creating a havoc of sorts. I have seen people taking personal loan to repay CC balance. The main culprit here is the fact that banks do not educate people about the payment & levy 110 charges.

    CC's aren't bad but u shud know how to use them!!!

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  13. In the US... having a credit card is one of the ways of building a credit and this is important as without any credit (its a point system based on ur ability to pay off) you get exorbitant interest rates and virtually no loans if you ever need one. Its a broken system which needs to be fixed!!

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  14. It is sad that people do not use credit card in the proper way. This is very useful in an emergency and if you repay it by the due date, not much interest is charged.

    I carry a debit card with me, mostly. Got a credit card also, but use it very rarely.

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  15. This is so true. One of my friends was almost in a debt trap due to credit cards. I know the amount of difficulty he faced to get out of the whole situation! I completely agree to your advice of not taking the credit card.

    When I asked him, why in first place he opt for a credit card for himself, he mentioned that the Bank Executives used to call him again and again to persuade him to accept the life time free credit card. Initially he denied taking it but later, pestered by the calls the poor fellow gave up and accepted the credit card.

    I wished he knew that he could have lodged a complaint against the bank, rather than accepting the credit card.

    Once while shopping for clothes and stuff, he just thought of using the card and then repaid card very late for the first time and for the second time and so on. The penalty amount increased and kept on increasing more with the rate of interest.

    In the middle of all this he also lost his job due to recession and found it very difficult to pay off the credit card. When he finally saw one of the statements in leisure he realized he was being charged for a very high amount every month.

    Woken-up all of a sudden he complained to the bank and the bank explained to him what had happened. In a major disbelief he wasn’t ready to accept the fact that the outstanding amount was more than 35,000.

    During this time he received an offer from another bank for another credit card. He accepted the offer thinking that he would withdraw cash from the other credit card and pay off the dues of the first one……

    This continued till he was in a situation of a major debt trap. All this despite having found a new job with a better pay.

    Even I’d suggest to all the people to use credit cards wisely, OR not use them at all.

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  16. i totally aggree, credit cards are abd and I have experienced it (unfortunately).
    here in the us, you cant have a car, an appartment, a cellphone, a house etc... if you dont have a credit history.
    Basicly you MUST have a credit card to live here. We are trapped!

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  17. Ramesh, a lot depends upon the individual. My husband has several. He travels a lot and prefers the credit card over carrying cash. Specially in Europe there is a lot of mugging. He has been a victim of that twice. Credit cards make a lot of sense as you can immediately notify the banks about lost /stolen cards.
    You just have to be balanced and know when to stop using it.
    I have been using credit cards for at least 15 years and have never had any overspending problems. (am I sounding superior?)
    Good luck to your brother.

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  18. That is sad. I guess this is a reason my mother has forbidden me to have a credit card so far although all my friends have one.

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  19. True. One must learn to live within one's means; unfortunately, the modern-day banking system isn't helping. Its sucking the living daylights out of so many decent households.

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  20. I prefer my debit card. If I ever use a credit card, it is an emergency -- like when my computer monitor went kaput and a large portion of my income depends upon my computer working. I do not charge anything that I can't pay in full when the bill comes.

    That joke was funny, Ramesh. But I have to say, it is always the woman being accused of spending when I have so many girlfriends who are the voice of reason while their husbands are the shop-o-holics of the family! lol

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  21. Banks started playing the same card principle of "credit swapping" and the result is the Economic Crisis the world is seeing today... When individuals are in economic crisis nobody sympathise with them... as it looks so trivial like "flapping Butterflies"...

    And now we know that even flapping butterflies can creat huge environmental impact, it may be worth telling the people and governments to completely banish such practices like credit swapping( including credit card balance transfers, commodities trading,futures.. Hedge funds and, perhaps consider a cap on share price movements), and the likes which increases the wealth of few without any corresponding value addition.

    On a lighter vain, having one credit card is good enough.. like having single relationship.. when you start anothor relationship when you already have one, then the trouble starts!

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