Saturday, October 2, 2010

Do you use credit card?

Hey everyone!

Its been actually ages since I wrote anything for Spotalks and I very much regret it. So as I was browsing through it tonight, I thought of writing something that is on my mind for the last few days- Credit Cards!

There is definitely a race out there among banks that offer credit card services! Every day calls, offers, redeemable points, gifts etc etc they can really turn our day into hell. But when I was offered a credit card by my bank, I enquired with some people about its uses and misuses. My findings were peculiarly strange when seen with an analytical eye.

Firstly, entrepreneurs and businessmen who enjoy a luxurious lifestyle (Lets use the Kiyosaki term 'Rich Dad' for these people) advised their kids against using credit cards! Perhaps because the kids are brought up in a 'need preceedes the cost' atmosphere at home (which means if you want something then get it, don't bother about the price) or perhaps they fear that the kids might not understand the need to save, or perhaps something else that I am unable to think of!

When I asked the same thing to my 'Poor dad', he said use of credit card must be encouraged! Why? He said 1) it helps to make the most out of offers and discounts,
2) helps you compile all your monthly expenditure to a single document (the credit card statement),
3) helps you curtail your lifestyle out of the fear of overspending (capitalising the fear of credit),
4) can be used across the globe so saves the forex trouble and also
5) helps you take loan in case of an emergency.

It is surprising that the two identified category of risk takers clearly hold contrasting views on Credit Cards. While businessmen who are considered risk loving people advise against use of credit card, the ordinary employee who is known for being risk averse seems to not care about the risk involved in Credit Cards.

However I feel that since it brings with it a risk of overspending, it is important to develop the right attitude of spending (what is that? the one that validates the necessity before spending) before one starts to use a Credit Card. I also believe that a good spending attitude necessarily does not involve meticulous maintanence of the expenditure down the paisa (or cents/shillings...)

Are you comfortable using your credit card? Or do you fear that you might tend to overspend? And is it correct to relate one's risk aversion to his readiness/inertia to use his Credit Card?



  1. i have to ask, where is everybody? :)
    nice post by the way.

  2. hehe, There is one more point about credit usage, it apparently boost consumerism and in turn attributes to the growth of Indian economy.

  3. well, it is true that ppl tend to buy more thanks to the 'buy now, pay later' option but it is also true that just credit options (to boost consumerism n hence the economy) is what led to the sub-prime crisis and the global economic downfall that followed.

  4. I never use a credit card- I am too lazy to pay before the last date, without incurring the mind numbing 24% p.a. It is a good tool to have- but where has the "good credit sense"of all these banks gone- they give credit cards to just about anyone...

    And Sathiya- me dad spoke to me about credit growth in India- it appears to be pretty stagnant in many areas- except in infrastructure and that too due to the government putting in the money....

    Sad miracle is India...

    Nice post though..

  5. thanks narayan.

    your dad's observation abt stagnat credit availability in india is very valid. india is seeing lopsided growth and the same will cause its inability to sustain this growth as life of people are becoming no better. While economic boom is trying to improve std of living of common man, the inflation rate is pulling it down equally. so the standard of living remains the same, meaning the ordinary man is living no better life. whatever he earns more goes into the same day to day expenditures. i feel its time for government to pitch in with some active welfarte measures that look into these issues (on the Keynesian lines)