Understanding the Concept of Using a Credit Card


Credit cards continue to remain the most widely used mode of paying for an array of personal expenses both small and big for a great majority of people. A large number of individuals prefer to use credit cards for shopping as well as for purchasing items of daily use even though there is a lot of controversy over clearing payments using this financial tool. When you or the shopkeeper swipes the credit card, it is the money of the institution (that has offered you the plastic card) that you’re using in order to pay for your purchases while keeping your own resources intact for emergency situations.

It is this tendency or propensity to exploit others’ funds to finance your personal expenses that is the root of all evil. Banks and financial institutions that provide you with a credit card will obviously charge a fee or ‘interest’ for letting you use their money which you’ve to repay on a periodical basis. Failure to reimburse the principal along with the interest in time adds to your debt burden. Inability to repay the outstanding sum on a continual basis eventually lands you in a debt trap where there is always an amount left to be cleared even after you’ve reimbursed at a compounded rate of interest.

Needless to say, you should exercise a lot of caution while using this instrument of payment. The first and foremost, of course, is to cultivate the practice of self-restraint. With a credit card in your hand, it is very easy to get tempted and go a spending spree. It is only when you receive the mailer at the beginning of the next month detailing your purchases (or expenses) via the credit card that makes you come down to earth. Before opting for this plastic card, compare and contrast the unique facilities offered by at least 2-3 approved credit cards. Go for one that lets you spread and leverage your liabilities and be committed about clearing your monthly dues.

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