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Saturday, 2 January 2010

7 Biggest MistakesUsing Credit Card

Article by Konobe , Edited by Edison

Recently I read the news in seconds if the NPL (non performing loans) credit cards in Indonesia has more than 10%. I also remembered an article written mate Edison telescoped 2009: The threat of Consumer Credit. Well, apparently it had started to show predicted results ..
Although the threat of breakdown of the credit card has a pretty frightening impact on the economy, this article I will discuss this issue from the other side, namely from the side of the credit card holder.
When bad credit card, of course, the 'headache' is not just the Bank alone. The card holder card (generally) are also experiencing depression that is not small. An example is an acquaintance of mine. He has problems with her credit card until the anxiety and stress. Almost every day he was called by debt collectors. Not just a mere reprimand he received, but also a threat. In fact, from my observations, he was among those who simply are.
So why do these my friends got caught in credit card debt? Although I do not know exactly why, but most likely he was to do one (or even several) of the 7 biggest mistakes in using credit cards. So what's 7 biggest mistakes?

MISTAKE No. 1: No pay all credit card bills

This can be said is the main cause why many people are caught in credit card debt. Not a few people who only pay a "minimum payment". When you do this, then the remaining balance will be exposed to very high interest rates (can mencapai2, 9% -4% per MONTH!). When you make this mistake, it's like you've taken the first step to enter into credit card debt bondage.
Pay off all your credit card bill!

MISTAKE No. 2: Taking credit card as a debit card (ATM)
This is one of the most fatal mistake in using a credit card. Credit Card Debit Card is not (ATM). Avoid withdrawing money using cash credit cards because this will attract interest and cash withdrawal fees are very high (even higher than the numbers I wrote in error No. 1).

MISTAKE No. 3: Using credit cards to pay debt
Including credit card debt into a kind of "Unsecured Debt", aka debt without collateral. Such debt is subject to high interest rates. Therefore, such debt is not just used for capital business will be extremely burdensome for the financial condition of the business / your business.

Other errors are classified as 'similar' is to use a credit card to cover debt repayments or type "Secured Debt" / debt using the guarantee. Debt is using the security (such as mortgages, KMK, etc.), the interest generally lighter. Therefore, if you use a credit card to pay the debt of this type, you actually 'trade' interest debt with a lesser interest debt heavier.

One of the 'catastrophe' in the largest credit card when an error occurs no.2, and no.3 error 'combined'. The most common examples of 'calamity' as this is when credit card holders get cash with a credit card to pay another credit card.

MISTAKE No. 4: No discipline to control the use of credit cards and bills
This error usually starts with the sentence 'first string aja ..' and then at the end of the month followed by the phrase 'Oh my God!?! Kok gede amat the bill '.

Determine the maximum limit allowed you 'string' every month. Then the control and record each use of your credit card every day. When the amount of usage is already approaching the maximum limit you specify, 'seal' your credit card, or if necessary (for the weak against the temptations of shopping), leave the credit cards at home.

Related to No. 4 this error, is not disciplined in credit card payments. Do not wait until the day of the final limit to pay off your credit card, because if the day you are busy / forgot / no business suddenly, it might be no charges paid.

MISTAKE No. 5: Too many to have Credit Cards
Credit Cards The more you have, the more difficult for you to control expenses each credit card. In any settlement of credit card you will be more troubled because the need to remember the date of repayment of each card is not too late to pay.

Some financial planners recommend to have a maximum of 3 credit card only. If more than that, maybe start to consider to cut the rest.

MISTAKE No. 6: Taking Credit Card as 'Additional Costs'
Although it sounds hard to believe, but not a few people who think as Money Credit Card Supplement. When the credit card application is approved, they get excited like a 'windfall'. Often this then leads to the 'shopping party' using the new credit card.

Having a credit card does not mean that you have more money to spend.

Credit card is not a 'blessing', 'bread' or 'windfall'. If you are not wise in using it, which is actually just 'catastrophe'. Remember that credit card is just a payment tool and not additional income. You may owe to the bank by using a credit card, but sooner or later the credit card debt you'd have to pay.

MISTAKE No. 7: Using a credit card for ALL purchases and payments
Not a few people use credit cards for all types of spending. Yet, for some types of products, would be better if purchased with cash money.

When you shop with credit card, the seller of goods will be charged for 2,5-3% of the transaction price by the bank. For some types of products (especially the small profit margin), a seller of goods is not willing to bear these costs, thus passing these costs to the buyer (aka you).

Usually in cases like this, sellers will say that 'If using a credit card, we put on a charge of X%'. At this moment, this is usually a charge of 3.5%. If you still buy it this way, you have to pay 3.5% interest only for 'delay' while paying groceries. And your money you put in savings earning interest is far below that.

Even if the seller of goods is not wearing a charge, try to ask if there is a discount for cash purchases. Often you will get significant discounts for purchases using cash money.

source: web


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