Unraveling credit card myths

Mythology depicts a cast of fearful nasties – such as Cyclops’, Hydras, and Chimeras – that have served as the boogeymen of ancient times. As is teh case however with all things that go bump in the night, a rational perspective and a little courage is all that is needed to slay these beasts.

We’re not in the days of Illiad any longer so the thought of being shipwrecked by a fire-breathing goat is rather comical – but we nevertheless harbor our fair share of modern mythological monsters. For example the case of credit cards; literally essential to everyday life, the credit card is often given bad press as being a “one way road to ruin” or “Big Brother’s homing device” – yet is this really the case? Local finance padawan and avid credit card user David Pamintuan dispells common misconceptions and beheads the mythical monsters of credit cards.

Myth 1: Credit card companies want you bankrupt

Many of us believe this notion that credit card companies are dastardly villains, rubbing their hands with glee whenever our accounts are overdrawn. while we may not appreciate the penalties we incur on our debts, that doesn’t mean that these companies are deliberately kicking us when we’re down. At the end of the day, a credit card company is still a business – it would be a faulty model indeed if they didn’t keep their customers happy. Contrary to myth, credit card companies actually reward cardholders who pay their bills on time – often waiving the annual membership fee, increasing credit limits, or sending tokens of appreciation. These can be something as simple as a neatly engraved pen or as exciting as a home entertainment system! Not the kind of behaviour you’d expect from a villanous cur who just wants all the money, is it?

Also, many of the major banks that operate credit cards are part of an organization that protects their customers’ rights in the form of the Credit Card of the Philippines (CCAP). The organization is aimed at improving the credit card industry in the country by maintaining a good relationship betweenthe companies, the government, and the cardholders.

Myth 2: credit cars make us spend more

The most enduring myths are rooted in truth, and this one is no exception. Aside from giving the cardholder the option to buy now – pay later, credit cards tend to do away with accountability as it’s so easy to swipe here, there, and everywhere without worrying. However, we’re supposed to be in control of our spending, not vice versa. How much you spend with your credit card is dependent on how much you want to buy; they are our tools, it is up to us how we use them. If you charge with reckless abandon, you’re sure to reap the consequences once your credit card bill comes in. But if you take care and limit yourself to buying within your means, there should be no reason to worry.

Also, credit card payments are also considered “good as cash” and should be treated as a cash purchase, meaning they should not be subject to any surcharges. Unfortunately, there are some establishments that do not follow this rule and impose up to an additional 10% on purchase price. These abusive stores ought to be reported to the Department of Trade and Industry (DTI) as they are violating the law.

Myth 3: Credit cards are inflexible

Perhaps the worst thing you can read in an establishment is “CASH ONLY” hanging smugly over the cash register, especially when you’re starving and all you’ve got in your wallet is a plastic card. Living a relatively cash-free existence takes guts, especially in our market where so many stores and restaurants, are operated by microfinance – but in reality, credit is so much more accommodating than cash. Aside from giving you the luxury of deferred payment, oftentimes at zero percent interest, credit is insured money. If unfortunate circumstances befall you and someone takes your wallet, it’s the easiest thing in the world to call your credit card company and inform them of the situation. Not only will they trace your card throught its purchases and flag it as stolen, they will waive all exprenses incurred while it was not in your possession for as long as you report the incident immediately. It is unthinkable to call the Bangko Sentral and say “I’ve been mugged, please track the bills down and render them void. Also, I would like a reimbursement of the amount that was stolen from me. Okay, thanks, bye.”

Moreover, credit cards enable you to utilize this century’s greatest retail development: online shopping. From books to boxing gloves, obscure movies to airline tickets, the magical button of “add to shopping cart” gives you access to virtually everything. Many people are also worried that their credit card numbers can be hacked and be used for spurious purchases, but an account with PayPal, a secure connection, and a a good anti-virus software should clear away your online shopping worries.

Myth 4: Credit card debt is for life

YOu may be thinking to yourself that a credit card is nothing more than a sure way to guarantee a life debt, constantly paying off borrowed money and dodging pesky phone calls – I cannot stress enough the importance of moderation in your financial habits. As credit cards are electronic versions of a promissory note, we have to be vigilant in making sure we can deliver what we promise. If perchance we find ourselves in a vicious cycle of credit card debt, all is not lost! Getting yourself out of any sort of debt isn’t half as easy as getting into it – but it can be done. Be responsible about your finances: don’t just pay the minimum balance, as you’re simply prolonging the agony. Use credit card for practical uses and not luxuries; charge food bought at a supermarket so you and your family can eat for a week instead of charging the same amount at a restaurant for one meal. Charge your gasoline to go to work instead of loading up for a barkada trip to Sagada. Simply put, make good decisions as to where your money goes. Invest in yourself, as you are your own greatest asset!

Myth 5: The cardholder always gets the short end of the stick

This is similar to the first myth, but it is a big enough issue to deserve an explanation all it’s won. Most of us think that every credit card transaction we make gives the credit card company more power over us – enough reason for us to associate them with “The Man”. Let us not waste time channeling our inner conspiracy theorist and skip ahead to accepting that this is a fallacy. There is always equivalent exchange in every transaction. Whatever the credit card companies get from our purchases is just barely above what they spend in their operations. To be able to give us a convenient way of paying, they have to set up offices, employ people, and create and monitor an entire worldwide payment system. If there is anyone who is being burdened, it is those who are working to ensure that credit card holders will enjoy using their cards without worry. The only thing we really have to do is to make sure that we pay for what we buy, on time and preferably in full.

See what is there…
As there is no need to look for what is not there

Being afraid of something that does not exist only hampers our progress. Our fear of the unknown is what keeps us from enjoying some things that are really made for our convenience. Just remember that a credit card, much like money itself, requires care and caution. If handled properly, a credit card is a useful tool in managing our finances. We should open our minds and see how the benefits of having a credit card actually outweigh the costs; buy a home, pay for tuition, live life, provided we keep a handle on expenses. For the most part, these myths arose because people were spending more than their means, neglecting payment, and just generally being unable to handle the responsibility of having a credit card. The fear caused by these myths is only as powerful as your imagination allows. So snap back to reality and experience yourself that which you only hear – or in this case, read – about. YOu may even see that there is something wonderful behind where that imaginary creatured used to be.