Money Matters - frustration in managing Credit Card

Posted by Ivan

Today, I want to write about the frustration in the choosing, handling and managing the financial aspect of handling our credit card. Most people would agree that the advent of credit card has done much good and convenience to us as consumer, especially so for those who travel a lot. But with it, comes the problem of managing its usage and finance. For those who have the urge to spend, credit card could be a night-mare, after all one must exercise control and responsibility. Over the years, bankruptcy cases arising from inability to pay have risen, and these go up in tandem with the economy of the environment.

My experiences in this area have shown that frustration can come from a few aspects.

a) Choosing the Right Credit Card - A lot of factors comes into determining the right card for you. If you are looking for prestige and world-wide acceptability, there use to be a few choices only. But today, practically the card be it VISA, Mastercard or AMEX has become an acceptable generic product everywhere, by many outlets. Next comes the cost to acquiring a new credit card, but looking at today's competitive environment, banks are practically giving away credit card at no cost, and to top it all, offering various types of gifts to entice the potential customer.
So, it does not really matter whichever brand that we are talking about, mostly driven by the promotion campaign that is available. One has to be cautious of the terms, as a lot of the freebies are only valid for a specific duration, and unknowingly, one may find that you have to pay if you do not meet the conditions. I have personally encountered a couple of such nasty incidences and
have to go through the hassle to deal with the bank to resolve it.

b) Key Features of the Credit Card - Banks are today packing in various features with the card that appeals to a wide segment of the market. Extended Payment Plan, a form of instalment plan now comes standard with many card. Affiliate programs to offer special discount, entrance to specific event such as Sales, Concerts etc are becoming the norm. Balance transfer that allows cardholders to extend credit period by moving around their debts has been around for some time, and for those undisciplined may lead them deeper into debts.

c) Loyalty Programs - Cash back, loyalty points in exchange for goods/gifts are also another feature and offers some form of rebate to the cardholders.

d) Cash Advance - One great convenience of the Credit Card is the cash advance feature , that allows those short of cash to cash out a certain sum. Financing cost for cash advance is however relatively high and cash advance feee varying from 1% to 3% can apply depending on the brand and issuer. So, cash advance should not be used at all, unless as a last resort.

e) Settlement - Perhaps, an extremely good feature of the Credit Card is the credit period for one can enjoy that comes with every card. The credit period again varies from bank to bank, but it makes good sense to settle fully upon receipt of the credit card statement. From what I understand, the industry average of roll-over is high, in the region of 60 to 70 % depending on location. By this I mean, people who cannot afford to settle the full amount, but only the minimum payment amount, which means they have to pay the interest element. Perhaps, this is where the Bank earns its profit, to be able to offer the free credit period and all those perks that are thrown in. So for those who can afford to settle in full, they get to enjoy these at no cost. One has to be mindful to settle in time, as delay will result in a penalty. I have personally gone through a few round of frustration of dealing with the Bank to get such charges waived for reasons beyond control.

f) Keep your CreditCard safe and secure. Most important of all is that you must take extra care to keep your card in place and to report it immediately when you lose it. I have not encountered this personally, but many have come to me about losing their card, and being coered by the bank to settle the charges incurred after the card was lost or stolen. All these people are very frustrated and partly attributed to their ingnorance. It is a tendency that we do not realise when our card is lost, and usually, come to realise it when the bank calls up or when we need to use the credit card the next time. By then, the credit card would probably have been used a few rounds. There are however guidelines limiting the lost and liability , and it makes good sense for one to know what these are and how they protect the cardholders. The Bank will not likely to let the cardholders know about this, but instead try to recoup whatever it can from the cardholders.

So, for all you credit cardholders out there, beware and guard your credit card safely and securely.

Yours truly,
Ivan