Tuesday, 30 November, 2010

Why Credit Cards can be dangerous

Why Credit Cards can be dangerous

Here's a forward that I got from a friend. Subsequently I noticed that it is a cut and paste from a comment posted on Subra's blog (subramoney.com).

I've always known that credit cards are potentially dangerous.

Here's one more anecdotal evidence:


  • Reproduction of the relevant part of the mail that I got:
    • Staying with credit cards, sometimes a disciplined approach but with a small scar can also be lethal.
    • I learnt this accidentally, but for those who have not learnt it yet, this might be something to watch out for.
    • I usually pay off my credit card bills every month without having any due carried forward. Few months back, I noticed something unusual in my credit card statement. There was an interest and subsequent surcharge. The interest was around 3% on my purchase which I did before the earlier month's bill date.
    • But I also remembered that I had paid the complete due amount, so out of curiosity I called up the customer care and asked for clarification. I was told that I had a balance which was carried forward and hence the 3% interest, other charges etc etc.
    • Just to cross check, whether the money which I had paid against my bill was taken into consideration at all, I asked him to explain. He told that the entire amount has been accounted for, but for 50 paise. The interest which was charged was around Rs. 1320 plus other charges. I was surprised about how much a 50 paise debit could cost me 
    • To impress my surprise on the caller on the other side, I asked him a question in exclamation: "If (not allowed in my card, but assuming it did) I made a purchase of 1 Crore and repay 99,99,999.50 immediately, you would still charge me 3% on 1 crore? He did not wait a second to answer me "YES"
    • I thought I was an idiot not knowing this, but when I told my project colleagues about this the next day, OMG :-) I was seeing their faces!! I am sure they would have started checking up their bills from thereon!!
    • Not buying things on credit is a very good habit. But if it happens for certain reasons, paying off the bill at end of every month is a good habit. But every importantly, paying off every penny you owe is a SMART habit :-) I have already started becoming smart these days!! And yes, I have started going through my credit card bills line by line, for which I had no time before :-)



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1 comment:

hotel key card said...

If a credit card holder is not able to pay his payments in the assigned time of payment then he will be given a grace period and in a case he would not be able to pay. His credit card would be blocked.

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