How often have you seen someone going through their wallet searching for a credit card in the checkout line- and were shocked by the number of cards they had in their wallet? Credit cards can be used as a form of identification when applying for a major purchase, or when renting a car; and they can be used for convenient purchases that you would not have to pay for until a month after you buy them. For many people, managing a credit card is harder than getting one. Any time you use a credit card, you are borrowing money you must repay. Think very carefully before you decide to get your first card. Is a credit card or borrowing money really necessary, or would another option works just as well? Maybe you should consider to invest in any investment company and get a lot of profit more than you can use by credit card that might burden you and plunging you to the destruction, which is for the worst; bankruptcy. Furthermore, you might think twice before applying a card credit if you know its pros and contras such as overspending, high interest rate and credit card fraud.
The using of credit cards during shopping is encouraging us to overspend and eventually blowing our budget. As we know, we can spend money that at reality we don’t actually have it. The ‘free money’ that we have, making us eager to shop and buy goods even they are not necessary at all. This is because normally, people with a credit card in their hands and surrounded with too much consumer goods and advertising tend to lose their heads. Well, it is easy enough to whip out the credit card and charged items but when the bill comes due, problems maybe roll in. Besides that, the credit card gives us chance to spend over the balance that we have. For example, when we have balance at RM500 we can still spend over RM1000. It’s incredible, right? Unluckily, this is the main reason that makes us spend over our budget, instead of helping us during shortage of money. On top of that, as the credit card companies charge interests on us, we will finally have massive interest rates and indirectly cripple our finances and might cause bankrupt. In overall, the credit cards are totally burdening our lives with a lot of loans if we don't use them wisely. Thus, they are very risky.
Using credit card might risk its user with high interest rate if they are not careful enough. Why does this problem could arise? This is because credit card in the other hand carries a limited credit line but with a very high interest rate and fees. In addition, with your bad financial management, then you use these high interest cards the wrong way, and further aggravate your financial situation it might drag you to be in high debt. For instance, if you spend a lot on buying expensive things, you may not be able of paying them exactly at the end of the month and carry the balance for the next month. If you still continue with this habit, gradually, your debt will increase as well as the interest rate. If this happen, just imagine for the next five months, what are your debt amount? Do you want to be declared as bankrupt? How would you continue your normal life without any property after that because once you have bad credit, you’re considered you a high-risk borrower. As a recommendation, before applying any credit card, you must know the detail. moreover, if a card issuer won't cut your rate after a year of good behavior, close the account and find another deal. After one year of on-time payments, ask the issuer to give you a better interest rate. Lenders won't make that offer; it's up to the customer to request it. As a conclusion, try to avoid using credit card.
Besides, the mushrooming growth of credit card usage is not considered as a good thing since it widely usage in our daily life can lead into credit card fraud and identity theft. Broadly speaking, it is a form of illegal obtaining of goods or services by using another person card and obviously it can also involve other form of card fraud-debit card or store cards for example. This can be done by creating a copy of a card, skimming the details during a routine transaction, stealing a card or intercepting it in the post and many other creative uses. Furthermore, it is a catastrophe to know that the fact which according to Bank Negara Malaysia (BNM) statistics based on year 2004, the total amount of credit card fraud was 68 mil and this surely a nightmare for us if we become one of those victims. Although the government introduces the usage of chip based card in order to reduce credit card fraud, but it is still not enough to combat this crime by 100%. Spooked by the risk you are exposed to as credit card holder? You should be think about it right now because fraud is a serious problem that affecting most everyone from every corner of Earth.
Last but not least, the usage of credit cards gives us a lot of side effects such that making us overspending, charged by high interest and exposed to fraud. Instead of helping us during shortage of funds, it becomes a burden in our lives from any side of views. However, if we are able to use it wisely, there is no reason why we must avoid to use it as it can totally help us. Some of the wise ways are do not spend more than you can afford to pay on a monthly basis and please limit the number of your credit cards. These are the best way that can make you out of loan and interest burden, that is sometimes more dangerous than loan shark. Indeed, there are other alternative ways such as short term loan and using debit card or the most easiest way is to save up money since childhood.