The Most Authentic Guide on Personal Finance and Investments


Words of Wisdom : "There are only two lasting bequests we can give our children... one is roots, the other wings." ~ Steven Covey

Don't keep too many Credit Card bills outstanding...Merge them

As credit card usage becomes common, it is not unusual to find people using more than one credit card. In fact, having 2-3 credit cards is quite normal nowadays. Unfortunately, however, this simple piece of plastic has become a WMD (Weapon of Mass Destruction).

Why?

1. Splurging : Given the phenomenal explosion in the availability of attractive products and services in the market today, combined with temptation to own the latest, it is but natural to spend. And when all one has to do is to swipe a card, no one really thinks as to how he or she will pay when the bill finally arrives. If your buying was limited by the amount of cash in your pocket, you have thought a few times before splurging.


2. Expensive : The interest charges on credit card debt are expensive...in fact, very expensive. Charges of 30-50% are quite common. Further, if you don't clear your bills on time, you have to pay interest on interest too. And on top of that, there is service tax also. Add this all up and you could easily end-up paying double/triple the original cost.

3. No breathing space : In a home loan or a car loan you get many years to repay and that too in convenient EMIs. But with credit card you get at most a few weeks before the bill lands up at your doorstep and you have to pay the entire amount at one go. Of course, the amount is not as big as a home loan or a car loan. But it is, many times, substantial enough that you can't pay it by the due date. And when you carry forward your balance, the high interest hits you...and too compounding.

4. Many bills : If you have many credit cards, you have to pay many bills. This could mean that sometimes you don't have sufficient money to clear all of them. Even if you can, keeping track of them...month after month..will be a big headache.    

When you cut down on your credit cards, you automatically cut down on splurging too. This, in turn, means lower bill value and hence easily payable before the due date. Thus you save on interest costs. Moreover, it is so much comforting - mentally and emotionally - if you have to pay just one bill. 

So be smart...merge all your credit cards into one card...and see how beautiful the life becomes.


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