But as every coin has two sides, the credit cards too come with a darker side. Yes, with all the advantages listed here credit cards come with their own little bag of troubles too. Most of these troubles though arise due to irresponsible use of the card by the consumer, and not due to the bank.
Consider a credit card as a weapon, a weapon that like any other weapon is dangerous in the wrong hands. Listed below are a few cons or drawbacks that one exposes himself to when he has a credit card.
Why to handle the credit cards with care??
Few pointer you must keep in mind
A credit card if misused will destroy the cardholder’s credit. This is a point of dire importance and has to be reiterated till the masses understand its depth. A credit card is an imprint of an individual in the bank’s records. The bank keeps a tab of the individual through the late payment or prompt payment of his dues. This information is studied and assessed by the bank to establish the credibility of an individual. This credibility will affect all the bank related proceedings the individual processes such as loans.
A man with a sketchy repayment history will not get the same benefits from the bank as a man with a clean slate and a prompt record. Furthermore in India the credit history of individuals is stored and evaluated by CIBIL (Credit Information Bureau (India) Limited). The Trans Union CIBIL Limited was created in August 2000, to play a critical role in India’s financial system. The CIBIL after evaluation of an individual grants him a score.
This CIBIL TransUnion score since its inception, has become the single most important piece of information for banks and for individuals. It is advised to not tamper with this score and regularly monitor it. Being too liberal with your credit cards without much care is a sure shot way to mess up your CIBIL TransUnion score. And this in today’s credit based economy is the same as spelling out your own doom.
Drawback of Credit card
Another drawback that a credit card has is in the form of its ease of spending. This is a boon in today’s world but if not paid due attention to, this can turn easily into a curse. As the individual depends more and more on the card, he increasingly becomes detached from the spending.
It has been observed that when the payment is as easy as swiping a card, the individuals tend to be too generous. They forget that they have not earned the money they are spending and that this money is a loan. Rather they believe that the credit limit prescribed by the card is the amount they are entitled to spend, and this is an error of catastrophic proportions.
The amount that an individual can spend is not the one prescribed by his card. Rather it is the amount that an individual can repay without breaking his sweat. This distinction and its acknowledgment is very important but sadly, it eludes most individuals in the country. Instead what we get is a section of population on a spending spree without any thought of the consequences.
Add to this the interest rates that are charged on the transactions of your credit card. And you will seldom touch the credit card for payments unless it is absolutely necessary. Also remember the late fees that you will be subjected to if you miss a payment. This makes it imperative to own, carry and use a credit card with responsibility.
Credit card like all the other advancements in a civilization is aimed at the betterment of the masses. Provided the masses understand and observe the importance of their own responsibility.