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The Idea
I have never used any credit cards (yet). Hey, I have nothing against them but it's just my own perspective that I don't find them rationale enough to use.
It is a well-researched (and established) fact that credit card holders (at least most of them) spend more in a month than people who pay by cash or by Debit cards.
It's pretty simple to justify this. Credit card is like lending money. Spend pow, pay us later. Convenience at its best.
When you see the latest iPhone, a debit card holder has to be aware of his account balance and if he could spend that much money at that point. It's like a layer of resistance. You might wanna buy, but you have to be conscious enough whether you buying something expensive would distress your budget.
Credit cards remove that extra layer of resistance (for buying). You just have to wish to buy something.
Oh sorry! you don't have to even wish nowadays, You perhaps just need to visit some shopping mall, some decorated shop, and your mind will get tempted to buy (it's sometimes hard to resist that temptation).
My mom specifically used to tell me a lot about buying unnecessary stuff. She was like 'Buy when you become worthy of something'.
That has remained my core philosophy of spending. Buying material stuff is alright, but the problem starts when you buy prematurely or compulsively.
Credit cards, at least, I believe increase that compulsiveness.
Some people told me 'you must use a credit card in USA'
I asked them why.
They said 'Using Credit cards improves your CIBIL score and that in turn helps you to sanction loans'. The reason people everywhere give on why one must use credit cards.
No wonder people say the US is a paradise of capitalists. Only a hardcore capitalist mind can think about inventing something like Credit card and then offer you loans on the basis of how proactively you paid back your lent money.
It's a debt trap. Of course, you could save yourself buying paying on time. People say Credit cards also provide lots of exciting offers and whatnot.
Isn't this also a trap?
What would you do if you have to make someone alcoholic (hypothetically?
The best way perhaps is to take him/her to bars and introduce him to people who drink alcohol (make it sound like normal behavior) and tell him the benefits of alcohol.
Credit card companies do almost the same thing. It lures you to pay more by Credit card, so you can build a better CIBIL score (and get more offers).
And once you have a decent CIBIL score, you might think 'it's time to utilize my good CIBIL score (what else I am building my CIBIL score for?)'
Then you would take a loan even if it was not absolutely necessary and fall into a debt trap. See how a good CIBIL score might prompt you to take loans.
I don't know about you, but my middle-class upbringing tells me to stay away from loans most of the time.
Isn't all of this start from using Credit cards?
I know you might think 'but I will use Credit cards wisely and only reap the benefits.'
You might reduce your loss but cannot win over the Credit card companies.
Are you sure, you will never buy compulsively because of easy Credit card money? Especially if you are in your 20s or early 30s.
It's an irony that the richest people like Warren Buffet, Mark Cuban (and many more) don't use credit cards. I am sure they understand money better than most people.
Again, I am not completely against Credit cards, although I don't like them. In today's society, you could be also forced to use Credit cards (a sign of modernity).
Use them cautiously and be mindful that you are carrying an explosive in your wallet in the form of a Credit card, which if you are not careful could jeopardize your financial life someday.
Do you have a different perspective? Let me know.
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