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I am recently reading some jokes on Internet and suddenly saw this joke on Credit Cards

This is a joke going around about the time when Larry King Interviewed Satan on his radio/TV Program. At one point during the interview, King asked Satan to describe the foulest deed he has ever done. Satan Refused to name one, pointing out there had been so much destruction over the years, so many lives cut short, and so many wars and calamities that none stood out. But Larry King kept pressuring “ Surely if you think hard enough, there must be one dastardly deed you are most proud of”. Satan thought for a moment. His eyes brightened and he replied, “Well, Yes. I guess if I have to pick just one particularly evil thing I’m proudest of, it would be this: Several Years ago, I invented Credit Cards.”
On reading this joke, it came to my mind that Yes credit cards has enabled millions of people to get mired in debt, and they may have led to many bankruptcies. Without credit cards, millions of people wouldn’t owe tens of thousands of rupees, on which they are being charged interest rates well above 20%.
Also, there is a worry about the security of buying things online with credit cards. But many reputed websites have taken many steps to protect credit card information. Also, the offline transactions aren’t necessarily any more secure. When you buy something and hand the cashier your card, for all you know, he might copy the number discretely and then engage in identity theft. It behooves us to always be vigilant with our credit cards, though we also need to accept that sometimes, it out of our hands
But there’s a flip side. Credit Cards can be good too. If you don’t abuse them, they are extremely convenient, permitting you to not to have to carry around bags of cash and provides you with handy summaries of your expenses each month. .
 
On reading this, some thoughts arrived to me about the positives and negatives of this popularly called “Plastic money”. I thought, that how easy this plastic money has made our lives. Now, even if you are in hurry and not able to carry cash, you don’t need to worry because this small card in you wallet allows you to access and buy anything that your eyes catches in a mall or shop. Also, today parents are looking to give credit card (Add-on cards) to their kids instead of Pocket money because of some benefits like track of their expenditures, amount limits, and others. No doubt drawbacks are there too, but everything comes in bag with good and bad.
Then I searched on the Internet for some points in favor and against this popularly called “Plastic money”. While going through, I found some good articles by renowned persons explaining the ifs and buts of the Credit cards. Although many of you are aware of these points, but for those who are unaware or are not clear about something, I thought it will be worth sharing with all my friends.
Amy Fontinelle, a renowned freelancer writer and editor with clients located across the United States and Canada, highlights some points mentioned here. According to her, if you can use a Credit Card responsibly, you're actually much better off paying with credit than with debit. I personally, do also feel that if credit cards are used with responsibility then they can provide you with many benefits. I have personally experienced most of the benefits mentioned here. Although, I know some of my friend says that if you have Credit Card the your spending increases, and then you always find it difficult at the time of payment. But, then the same thing comes of using the card with responsibility. Find out why your trusty credit card comes out on top. 
 
Flowers out of your Plastic Money package
1.      Signup Bonuses > The standard debit card offers zero rewards or very small rewards. Many credit cards, however, offer significant rewards when used responsibly. For example, applicants with good credit can get approved for credit cards that offer signup bonuses worth anywhere from Rs.300 to Rs.500 (and sometimes even more). Other cards offer up a large number of points that can be redeemed for rewards like gift cards or air travel.
2.      Cash Back > If you sign up for the right credit card, you can earn anywhere from 1-5% back on your purchases.
3.      Investment Rewards > Some cards, offer a higher rate of cash back; in exchange you must deposit your cash back directly into an investment account.
4.      Frequent-Flyer Miles > It seems like every airline these days have at least one credit card available. Cardholders rack up miles at a rate of their spending. The price of the plane ticket you ultimately end up redeeming your miles for will determine how valuable this credit card reward is, but many frequent flyer cards are made immensely more valuable by their mileage signup bonuses - these are often enough to put you 50-100% of the way toward a free flight within a month or two.
5.      Points > Many card rewards work on a point system where you earn up as you spent. When you reach a certain point threshold, you can redeem your points for gift cards at some stores. You can also use the gift cards as gifts, making holiday and birthday shopping simpler and less expensive.
6.      Safety > Paying with a credit card makes it easier to avoid losses from fraud. When your debit card is used fraudulently, the money is missing from your account instantly. Legitimate payments for which you've scheduled online payments or mailed checks may bounce, triggering insufficient fees and making your creditors unhappy. Late payments can also lower your credit score. It can take a while for the fraudulent transactions to be reversed and the money restored to your account while the bank investigates.
By contrast, when your credit card is used fraudulently, you aren't out any money - you just notify your credit card company of the fraud and don't pay for the transactions you didn't make while the credit card company resolves the matter.
7.      Grace Period > When you make a debit card purchase, your money is gone instantly. When you make a credit card purchase, your money remains in your checking account until a couple of weeks later when you pay your credit card bill. Hanging on to your money for this extra time can be helpful in two ways. First, if you pay your credit card from a high-interest checking account and earn interest on your money during the grace period, the extra interest will eventually add up to a meaningful amount. Second, when you always pay with a credit card, you don't have to watch your bank account balance like crazy to make sure you stay in the black. (It's also essential to keep an eye on your budget to make sure you're spending within your means). 
8.      Insurance > Most credit cards automatically come with a plethora of consumer protections that people don't even realize they have, such as rental car insurance, travel insurance and product warranties that may exceed the manufacturer's warranty.
9.      Universal Acceptance > Certain purchases are difficult to make with a debit card. When you want to rent a car or stay in a hotel room, you'll almost certainly have an easier time if you have a credit card. Rental car companies and hotels want customers to pay with credit cards because it can be easier to charge customers for any damage they cause to a room or a car this way. So if you want to pay for one of these items with a debit card, the company may insist on putting a hold of several thousand of rupees on your account. Also, when you're traveling in a foreign country, merchants won't always accept your debit card as payment, even when it has a major bank logo on it.
10. Building Credit > If you have no credit or are trying to improve your credit score, using a credit card responsibly will help your credit score because credit card companies will report your payment activity to the credit bureaus. Debit card use doesn't appear anywhere on your credit report, however, so it can't help you build or improve your credit. 
 
Thorns out of your Plastic Money package
Despite the advantages that paying with a credit card has over paying with a debit card, for some people it's still better to use debit. Using a credit card may not be right for you under the following circumstances:
 
  1. You can't pay your credit card balance in full and on time. If this tends to happen to you, stick with cash to avoid racking up fees.
  2. You tend to spend more than you can afford. Paying with debit will limit you to spending money you've already earned.
  3. You can only get a credit card with a very low credit limit and you have a hard time staying under the balance. The fees for exceeding your credit limit are costly, and doing this can also put a dent in your credit score. 
 
Conclusion
If you already know how to use a credit card responsibly, you really shouldn't be using your debit card for anything other than ATM access. And if you don't know how to use a credit card responsibly, now you have even more incentive to improve your habits. Many benefits await those who opt to responsibly use credit cards because

“Everything comes in a packet, try the positives ones because it is the way to avoid negative ones”


Published by

Rahul Gupta
(Project Controller, ACA, MBA(Fin.))
Category Others   Report

2 Likes   36 Shares   9354 Views

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