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Thursday, September 18, 2008

Credit Card - Friend or Foe (Part 2)

This post continue from Credit Card - Friend of Foe (Part 1)

Majority generation born after 1980 are using credit cards. In fact, the credit card usage has been so severe since the late 90s and this in fact has cause issues like subprime credit pop up in the US recently. Credit cards, can in fact become our friends if we manage it well. As was posted previously, with credit card, we do not need to bring a lot of cash with us - which is very important as the rate of theft is increasing from day to day. Besides that, loyalty reward points or cash rebates that can help us to save some of our money.

Another good thing about credit card is the easy payment scheme. By using easy payment scheme, expensive stuff like furniture, gadgets etc can easily become more affordable. For example, a PC cost about RM3k can be pay as few as RM300 installment over the next 12 months. But this can easily become the bad thing about credit cards if not managed properly. One can easily get deeper into debt because of this.

Next is that, by using credit card can also educate us on financial planning and discipline. To use credit card without paying interest, one have to really plan and jolt down every details on his or her spending. Doing so requires discipline and good financial management. From this, we know that using credit card requires some skill :).

Phew.....I think I better stop blogging as of now. I still need to figure out how to solve some of the stuff tomorrow morning.

Monday, September 8, 2008

Credit Card - Friend or Foe (Part 1)

While I was reading through a forum regarding credit card, a question popped up in my mind. Is it better to pay using credit card or cash? A lot of people went into debt because of this plastic, which I found it to be user-friendly and it gives me more pros than copns. Sure, some might argue that because of the user-friendliness, it causes a lot of young executives, housewives etc to fall into debt. In fact, one of the reason subprime crisis popped up out of nowhere in the United States is due to credit cards' debt.

Actually credit cards can be our friends as well as foes, just like fire or water, when under controlled, it will become our friend, but if we lose control, then it will become our foe. The good thing about credit card is we do not need to carry a lot of cash with us whenever we go our doing weekly groceries, shopping, dining, etc. Imagine we want to purchase furniture, how much we are bringing along with us and with the increase in crime rate, the possibility of getting rob also increases. Thus, this has prompted a lot of us as consumer to pay by credit cards. Why? Because most of us worried that we'll be robbed, worry about snatch thieves (especially ladies with handbag). In fact, to me, I'll never let my wallet to have more than RM100 whenever I go out shopping, dining, etc. I always charge my expenses to credit card, be it just a few dollars or few hundreds. To me, I'll never feel safe if I am loaded with cash. So if one day, the credit card terminal is down, I'll be doom. LOLz.

Another thing about credit card is the loyalty reward points or cash back or rebates. With the rising competition day by day, each banks will try to outdo each other by offering reward points, where we can redeem goodies with it, or cash back or even offering rebates. I still remember not long ago, there's no credit cards offering points or rebates for petrol. But due to competition, now we have Citibank Shell Card, CIMB Petronas Card, CIMB DA, which offers 2% rebates for all type of petrol consumption, Maybank Petronas Credit Card etc. With the petrol price soaring high, the rebates or points or cash back from the petrol usage can be significant. I have a friend who told me that after few months, in fact, he had one of his weekly grocery for free.

I will continue to share more over the next few days/weeks depending on my workload on the credit cards. Feel free to comment on this and maybe we can brainstorm more on the credit cards issue.

Continue to Credit Card - Friend or Foe (Part 2)