{"id":6486,"date":"2014-11-20T12:06:07","date_gmt":"2014-11-20T06:36:07","guid":{"rendered":"https:\/\/blog.fundsindia.com\/blog\/?p=6486"},"modified":"2014-11-20T12:13:30","modified_gmt":"2014-11-20T06:43:30","slug":"10-ways-to-not-let-credit-cards-rule-your-life","status":"publish","type":"post","link":"https:\/\/fundsindia.com\/blog\/personal-finance\/10-ways-to-not-let-credit-cards-rule-your-life\/6486","title":{"rendered":"10 Ways to Not Let Credit Cards Rule Your Life"},"content":{"rendered":"

This article is a contribution towards our financial literacy series. It has been written by a specialist in credit and debt counseling – Satish Mehta, Founder and Director of www.credexpert.in.<\/div> <\/em><\/p>\n

\"fi_cc_Nov20\"<\/a>The other day, my secretary discovered that I was the former Managing Director of the Credit Information Bureau Limited (CIBIL) of India. Immediately, she sheepishly sought my advice as she was getting calls from recovery agents who were threatening that they would report her name to CIBIL, after which she would never get a loan or a credit card in her life. She had not repaid the outstanding dues on five of her credit cards. <\/p>\n

In my mind, I was thinking, “Wow! What did I help build? An organization that has replaced the proverbial hockey stick?” On a more serious note, with some gentle prodding and not so subtle questioning, I discovered the following amazing facts:<\/p>\n

\u2022 She had 5 credit cards with limits ranging from Rs 15,000 to Rs 30,000, in all aggregating to a limit that exceeded Rs 1 lakh.
\n\u2022 She had applied and received these cards in the days of ‘indiscriminate gathering of credit card accounts’ by lenders.
\n\u2022 She was using them rather irresponsibly to pay for things she intuitively wanted, not thinking about how she would pay back the accumulating outstanding balance.
\n\u2022 She was paying the ‘minimum amount due,’ feeling smug about the fact that she was never late to pay it.
\n\u2022 She had now realized the very high cost (over 30 per cent) of not paying the rest of the outstanding amount on time.
\n\u2022 Due to the interest rate payable on the outstanding amount, the dues had ballooned to a huge amount.
\n\u2022 The aggregate outstanding amount was so high that she was unable to pay it.<\/p>\n

That’s how she had invited calls from recovery agents. Over the next few months, we worked on a specific plan and weaned her away from this huge debt trap, of course, with a little bit of help from friends and family, some counseling, and a large dose of imposed discipline. <\/p>\n

Soon, she was relieved from the threatening calls, her credit history improved, and she started \u201chating\u201d plastic with vengeance, having seen what it did to her financial situation and peace of mind. As a bonus, her efficiency at work improved too!<\/p>\n

For all of us, the lessons to take from this experience are:
\n\u2022 Do not apply for \/ acquire credit cards beyond what you need.
\n\u2022 Cancel or close credit cards you do not use.
\n\u2022 Do not swipe cards beyond your capacity to pay all dues on the date the payments are due.
\n\u2022 Remember you have to pay \u2013 swiping means delaying that, and not wishing it away!
\n\u2022 This delayed payment comes at a huge financial cost \u2013 interest rates on outstanding credit card dues ranges between 30-38 per cent per annum.
\n\u2022 Paying only the minimum balance is no answer \u2013 in fact, it compounds the problem as it lulls you into a false sense of complacency and belief that you are in control of your card bills. Don\u2019t forget the huge interest on the unpaid amount.
\n\u2022 Always pay your credit card dues on \/ before the due date.
\n\u2022 Do not put yourself in a position where the payment due hangs on you like a sword.
\n\u2022 Use your credit card as a tool of convenience, and not as a tool to leverage your current income in order to borrow multiples of that income.
\n\u2022 Before you swipe that card, ask yourself \u2013 “Do I need this? Can I pay this amount when my next salary comes into my bank account?” If the answer to both these questions is ‘YES,’ then go ahead and swipe away!<\/p>\n

Follow these 10 commandments and plastic money will never dominate your life. <\/p>\n

On a lighter note, a bank called its credit card customer to say – \u201cYour credit card payment is outstanding!\u201d To this, the customer grinned from ear to ear and said, \u201cThank you for the compliment!\u201d You sure don\u2019t want to be in that position!<\/p>\n

ABOUT THE AUTHOR<\/strong><\/p>\n

Satish Mehta is the Founder and Director of www.credexpert.in – a credit and debt counselling company that provides end to end customized counselling to individuals by handholding them through their credit life cycle.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The other day, my secretary discovered that I was the former Managing Director of the Credit Information Bureau Limited (CIBIL) of India. Immediately, she sheepishly sought my advice as she was getting calls from recovery agents who were threatening that they would report her name to CIBIL, after which she would never get a loan […]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[66],"tags":[206,193,187,185],"yoast_head":"\n10 Ways to Not Let Credit Cards Rule Your Life<\/title>\n<meta name=\"description\" content=\"Follow these 10 commandments and credit cards will never dominate your life.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.fundsindia.com\/blog\/personal-finance\/10-ways-to-not-let-credit-cards-rule-your-life\/6486\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"10 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