Plastic money: a blessing or a curse? (Part II)

Having a credit card can be very convenient but most people take this convenience for granted to a certain extent that they do not realise that they are spending money that they do not have now. With that kind of mentality, it could only spell trouble as well as the beginning of a life long of debts that you will take months (even years to clear).

What has prompted me to start writing about credit card is a bill of a friend that I accidentally saw a few weeks back. What shocked me is that although his credit limit was only RM 3k, the outstanding balance owed to the bank was actually RM4.6k!! You may ask, where the heck did that additional RM 1.6k come from? Simple answer: first the bank charges you for spending over your available limit - RMxxx, then due to the fact my friend did not pay his bills promptly, bank charged another RMxxx and finally he does not settle his bill fully leaving a balance to be charged a small interest (according to him!), the interest charged is actually not small at all, its 18% p.a. Even higher than mortgage interest!!

You may automatically assume that this friend of mine has just graduated and just got his credit card, hence the tendency to use the card more than he should. But that is untrue, he has been working for a while now and graduated eons back. This is indeed a worrying trend that I observed from working adults today. They have the concept of "swipe first, pay later" all wrong! It is supposed to be "swipe first, pay later... with money that you have"

Fellow readers (though there isnt much of you out there), do not fall into this "trap". Debts are hard to settle, looking for the money to settle the debts are even more difficult.

Be prudent! Spend within your means. Consult help if you think your spending is spiraling out of control.