HOW best should one use a credit card? If that question was posed to credit card holders, very few will provide a valid answer while the vast majority would state that the card is a passport to pay for anything, any time without realizing the importance of the word credit. They think that the credit card is their money and that they can pay whenever they want to buy, not knowing that the fine print indicates there is interest and late fees are charged. As the word credit indicates, the money offered to us by the card firms is a loan, and we have to pay the company a charge for that loan. If we build the loan amount recklessly and do not pay the charge or the credit amount in time or quickly, we will reach a stage wherein the card would look like a bane instead of a boon. There have been cases in which people, after using it without control, have not been able to pay the money back, and have had to take out a loan, either from family, friends or even banks, to pay off the credit card dues. Some simply ignore to pay despite the risk of being placed in a black list of people with poor credit worthiness. Having a credit card is very important these days because it is used around the world and is the safest way to pay and a very good alternative to carrying cash. It also has replaced the currency globally as a trusted alternative in major hotels and shopping outlets, which prefer card to cash, while some outlets simply do not accept cash. There are hotels around the world that insists on a card and do not accept any customer without the guarantee of a credit card. A card-less customer is politely turned down, even if he/she is willing to pay three times the amount as a security deposit. It has made life easier and more connected, for the card simply does all the work seamlessly without paying cash on the spot. Today the card is used when making airline bookings, and for paying for your holidays and outings. The card makes it easy for people to shop online, and it is also easy for people to purchase things that they set their eyes on, or make spot purchases. For nearly every shop now is equipped with the card paying machines or swipe card readers, and all one does is flash the card and pay. The card has put people in a comfort zone, allowing them to do away with carrying cash everywhere, while providing safety of cash from being stolen. It has also allowed people to buy an item even if they do not have the money in their accounts or at hand to pay for it. People simply go on a buying spree without realizing that they have to pay back the amount and the inherent charge that the company levies for providing that credit. And when it is payback time, they find the card is useless to pay the debt they owe the company. Many people have not been educated on the fact that imprudent and constant use of the card would put them in a debt trap, from which they can hardly extricate themselves. Some are trapped forever because of their reckless buying, despite knowing that they do not have the means to pay for it. What was been done to educate them of what the card means and how to use it, while elaborating on the dangerous consequences of its misuse? Citing recent statistics, Talat Hafez, secretary-general of the Media and Banking Awareness Committee of Saudi Banks, said the total credit card debt in the first quarter of 2014 had reached SR8.8 billion. To me that number is huge. I do not know what is the percentage of people who are failing to pay their debt and what are their numbers now. But if some awareness of the pitfalls of the card's misuse is not relayed to people, then I believe many more would be trapped in the debt cycle. People in debt because of credit cards are victims who need help, even if they misused it. The constant worry of the debt amount increasing because of interest and late fee charges and its impact on their budgets and family spending would prey on their health. Some are in serious debt with the total amount being three or four times as much as their basic salaries. How can they deal with such issues? Personally, I too experienced this because I too fell a victim to it. For years I was struggling to pay off my Visa card dues and I did not want to solve this problem by creating another one, which is to take a loan to pay off the amount. I was among the lucky ones to receive the two- month salary bonus, of which 80 percent of it went to pay off the entire amount on the Visa dues. After that, I felt liberated finally. Two days later I received a call from a bank agent offering to increase my credit limit, while also offering to transfer a huge amount of money from the credit card to my bank account because my credit rating was good. It took me years to finally pay off the debt and they want me to walk into it again. I was a bit upset with the bank agent and I asked him how did he know that I needed money. His answer was that he worked on the assumption that I had projects that I wanted to do and therefore this offer. I directly told him that I had suffered years with a debt, and why should I repeat the same experience? He hung up after thanking me for giving him some of my time. Now I ask, how many people receive such phone calls and how many are convinced that this is the right way to get money? I am sure that they would not be told the downside of it. I have known many people who have at least two credit cards and are struggling and juggling cards to pay. They feel like every time they take nine steps forward in cutting their debt, they go back eight steps in paying late fees and interests. I ask readers how many of their relatives and friends are suffering from credit card problems? I am sure there are many. Why do banks want to trap people into these debts knowing very well that they may not be able to pay them? Agents tend to convince people to apply and get a credit card because there is a commission for them in every card they sell. But did that person explain to the customer the danger of misusing the credit card? I am sure not. In the past, banks used to send their agents, or what I describe them as piranha fish, to the place of work where they would try to convince people to apply for credit cards. Smart people, who tasted the pain of paying credit card's interest and late fees, switched to the prepaid ones, which means what you depos in the credit card is the amount of what you actually are going to use, no interest and no late fees. What is needed is for non-government agencies to increase more public awareness about this issue. Banks need to play their role and help those in debt by waiving the interests and late fee charges so the victim would pay only the basic amount. People at the same time, before accepting such a card, should read online about the best ways to avoid falling victim to one. All steps are there and the information is coming from people with real-time experience. If people are waiting for banks to provide them with such tips before they apply or get a card, then they will have to wait forever, or those already in debt to pay forever. — The writer can be reached at [email protected]. Twitter:@anajeddawi_eng
