Once upon a time I didn’t have a credit card and was very excited when I got one for the first time. Want to know what the credit limit was? It was a meager Rs 10,000 as per today’s standards. After a few years of that, I was possessing about 8 different credit cards of different banks and was very proud of my possession, as if it’ll earn me something. A lot of time has passed since then, I now possess just 1 credit card and that too only for emergencies.
So the question is, why the dramatic change. Well, with time I learned many things and the pros & cons of using credit cards were one of them. I’m going to reveal my story here hoping it would help someone. Given below are the reasons why I surrendered almost all my credit cards.
Suppose today is 15th of a month, you’ve already allocated your salary into different purposes like domestic expenses, savings, utility bills, car service and so on; suddenly while roaming in a mall you came across something that you really liked. If you don’t own a credit card and you don’t have surplus money, most probably you’ll console yourself saying you’ll buy it later. But if you have a credit card you may think let’s buy it, will pay the credit card bill later? Sounds like your own story? I know.
Even worse, if the bill amount is too high (it can easily be more than your one month salary) then you may even choose to convert it into EMI. This is worse because now you’ll pay it like a loan (principal + interest).
This is what I meant by discipline, you must spend only as much as you can easily pay back every month. Otherwise, your proud possession (credit card) can become one of the greatest mistakes of your life. This is extremely important to stay away from credit card debt.
Beware of the frauds
Even today I see some people use some kind of credit cards that don’t ask for a PIN, not sure which card is that. If you have such a card then you’re at risk, you must swipe the card yourself wherever required.
Then if you make online purchases using a credit card, most of the sites/apps ask to save the card details on their site so that you don’t have to re-enter all the details every time. That is dangerous, the site can be compromised by hackers and your credit card details saved there would be out in the public.
Then there are certain sites where you must store your credit card details to be able to use it (e.g. Google) to buy something from there. It doesn’t ask for a PIN or CVV number before making a transaction. I had recently been a victim of such an attack where I was sitting at home watching TV and Rs 1,63,000/- was spend from my card by some fraudster. Fortunately, my card belonged to a private bank that’s really vigilant on any transactions above Rs 10k. They immediately called me to confirm the transaction and my response was negative and they blocked my card.
Now there is a new type of cards in the market that has a wireless symbol on them. It doesn’t need to be swiped or inserted in the machine nor it asks for a PIN. Just hover it over the machine and the amount gets deducted. It’s not very difficult to be misused.
- Use mobile wallets and keep only a limited amount of money in it at all times. Even if some fraud happens only that amount of money would be at risk.
- Use the debit card of a bank account where you don’t keep a lot of money. Just keep some money in that account for your usage. Once exhausted transfer some more. This way only the money in that particular account would be at risk if something goes wrong.
Folks, that’s all for now. Please let me know in the comments what you think about it and if you want to know anything more about it.