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01 September 2011

How to Curb Excess Expenses-Use of Credit Card


You may be spoilt for choice as there are many credit card companies offering credit cards at very low interest rates and also with many rewards and offers. You also get many phone calls and sms'es daily from companies offering credit cards. You select a card company and within few days your shining plastic card is in your hands.
The newness of the magic card and the freedom to spend sometimes goes off hand and you may splurge on unnecessary things unknowingly. this is not all you end up with a huge bill after the end of the month and have to pay before the due date. Payment after the billing date will come along with interest charged and if you fail to pay then this gets carried forward to the next month. Many of us are not aware of the procedures of working of the credit card. This is reality, you get the freedom to spend, but this is your money and you are spending it freely without any pressure. Usually when we go for shopping, the card is the rescuer and we do not pay attention on the purchases. very often we end up spending more than planned. We convince ourselves that we do not have to pay the bill now! we have to next month. Then we prepare ourselves that we will not repeat this same habit again, and this was just for once. After some time again when we go shopping the same thing happens. We convince ourselves that we need all these things and somehow we would have to purchase them , now or later, then why not now? and we end up making more purchases.
It is better to avoid using credit card for small expenses like daily groceries and market trips. Firstly there is lot of risk of card data being misused and you also end up buying more. The credit card companies work on the human psychology of satisfaction now and pay later. Hence the magic card companies are flourishing, by making us spending more money than we would if we had to pay by cash. Keep card use to minimum for daily purchases. Try paying small bills by cash and keep the bigger transactions for the credit cards.
Most important safety and security matters in financial dealings which require bigger amounts are best paid by credit cards and they are a boon for many in this aspect, but a no no for daily shopping trips! cut down use of credit card for only specific purchases and only where large money transactions are required. You would not like to shop for a wedding with thousands of rupees in your pockets and the magic card comes handy here but buying few groceries from a store, your good old cash is best!

Try and see how much you save!

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