WE have banks to thank for issuing credit cards to applicants.
Card holders have the convenience of not having to carry too much cash.
A credit limit is set at a multiple of the applicant’s monthly income.
A monthly credit statement is posted and the card holder has three weeks to settle the dues.
Credit card holders will do well to be wise in their spending.
Careless spenders may end up with huge unsettled dues and may be declared bankrupt.
To derive maximum benefits from this facility, we need to be strategic in its usage.
Firstly, know how much credit you need. You may qualify for and be offered much more than you need.
It is wise to decline the higher offer. Be mindful that the credit limit may be the amount you lose if unscrupulous people use it.
You may have to reimburse the bank. So always secure your card.
Secondly, know that credit is not free money. You need to pay back every sen you spend.
That said, credit is an interest- free loan if you settle your dues on time.
Credit also gives you the good feeling of enjoying and using goods or services before you pay for it. Call it a human weakness, but this does give people a temporal satisfaction.
Thirdly, max out your accrued dues or credit for the longest time possible in the period between monthly payments. Let me elaborate.
When you receive your monthly statement indicating your liability for the month and it’s less than your credit limit, you can spend more.
You should pay your scheduled bills (like water, electricity, telecommunications and incidental instalments) and do your planned purchases after the statement date.
This way, you top up your credit dues. Other incidental purchases can be done throughout the period before the next statement arrives.
Since you have three weeks before you need to pay last month’s dues, in essence, in those 21 days, your credit card has incurred more than the dues amount.
This way, you will suffer smaller losses if you lose your card.
The thief can spend only what is left of the credit limit. Indirectly, this is a precaution.
Fourthly, many banks offer interest-free instalment plans for credit-card spending on certain goods and services.
Do take up these offers. Instalments ease repayment and they are interest free.
A credit card can be a good servant but a poor master. Use it wisely and be blessed.
LIONG KAM CHONG
Seremban