Saturday, April 18, 2009

Credit Cards: Still A Boon

Credit cards have long been serving the masses all over the world, but it still is a topic of debate if credit cards are a boon or a bane. Using credit cards is like using a remote control. When the remote is in your hand you are responsible for what you watch. You may watch a baseball match played 2 years back or you may watch some infotainment channel like the discovery or the animal planet. Similarly when the credit card is at your disposal you are responsible for all the credit dealings you do, good or bad.

Credit cards were made in order to help people live a simpler life. If some people ended up complicating their lives, credit cards are not be blamed. Here’s why.

The basic principle defining a credit card is that you can buy whatever you like and pay for it later. What people remain oblivious to during purchases via credit cards is the latter half of the previous sentence: to pay for it later. The credit cards also give you the option of not carrying huge sums of money while going shopping or on a vacation.

If you are out in the market and fall for a particular pair of shoes and feel like buying it that very moment, then either you would buy it right then if you have the money or you would decide to buy it on the 30th of month, when you are to get your pay check. However the shopkeeper tells you that it is the last pair of shoes of its kind and could be sold any minute.

This is when credit card comes into picture. Using a credit card you would be able to buy it and pay for it later. This way you are asking your own bank to pay for it on the condition that you would return the money to the bank in a month’s time by having the money transferred to your account in the bank.

This is a facility that the bank has availed to make life happier. However if you fall for a SUV and decide to buy it using your credit card thinking that you would arrange the money and pay it later, then that is something that could be disastrous for your financial life. Given that you earn $1000 per month and the SUV costs $10000, what if you would not be able pay the money in a month’s time?

If in case you are not able to pay the money back in a month’s time, the bank charges you with a penalty or you have to pay an interest of approximately1.3%. This may look small but in reality is an exorbitant rate of interest. This is the first step to financial exigency and your troubles keep snowballing once you start with the downfall. This is how most of the financial deaths are incurred.

It is the human stupidity that leads to such a financial catastrophe. However if you use your credit card wisely, then there is no way it could lead you into the deep quagmire of debts.

Another way of using the credit card wisely is to keep checking your credit history and keep working on improving your credit score. This is exactly what you can do at Reliacredit. You can get your credit report and know all about a good financial life. The site helps you lead a happier life in monetary terms by providing information about all kind of terms involved in the credit world.

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