Folks, today i got a new credit card from two major financial institutions in Malaysia: Maybank and CIMB. I shall be wise and spend only on necessary things with my credit card and will not use it to buy things that is way too pricey.
To me, credit card is a good thing and it can be convenient especially when one has to travel abroad such as outstations or overseas. The bad thing is however, the debt can be accumulated to becoming a mountain. If one does not know how to control their money or doesn't even know the true meaning of the word "budget", then i don't think a credit card would be necessary for you.
You see, a credit card is not a cash money or free money. It is a money that you can access in the absence of your "real money". Put it another way, a credit card is a method of helping you to pay-off goods and services offered to you when you needed the most. But here's the catch: when you use a credit card, the financier will impose a certain charge on top of the money that you used. However, the charge will be levied if you pay the money that you use in total...that is before the due date or the next statement date; and this depends on the bank's terms and conditions.
Before you wanted to use a credit card, you must be able to differentiate between a "need" and a "desire". Examples of a "need" is paying your bills, shopping for groceries and important household items, (and also using it during emergency situations); and examples of a "desire" includes buying things beyond what you can afford like let say buying a t-shirt that is equivalent to almost half of you salary!
Credit card should be used when you need them the most but you must also bear in mind that you are subject to bank's charges: whether hidden or not. How to know about all these charges? Read the long and wind-up Terms and Conditions of the banks. Sometimes, these T&Cs are written and printed using small fonts (probably size 8 or 7) and therefore, it is your responsibility to read them even if you require magnifying glass. Though one may argue and say that this is one hell of an unethical act, but to the bank, this will only save more paper hence less wastage/misuse of trees.
I am no guru nor expert when it comes to finance, but i must tell you to beware and be extra alert when it comes to using your credit card.
Just be wise, won't you?
I don't like credit cards, though i understand it's usefulness when i'm abroad.
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