Dark Truth of Credit Card | Credit card scam | Benefit of using credit card

Introduction to Credit Card 

For many people the word credit card sounds like a dead trap and maybe for the same reason many fear owning a credit card or buying a credit card and to be honest it is true credit card has put many people into debt trap and have possibly ruined many people’s Financial lives but having said that would you believe if I told you credit cards also help many people to save a lot of money and help them become more financially strong and on top of that also credit card favors them to book free flight tickets and movie tickets and also help them get huge discounts on the spendings they are bound to make every month like on groceries or paying electricity bill water bill or gas bill so to put it in a simple way credit card is Like a Knife it can cut your vegetables and it can also cut your hand so basically it is up to us how we use credit cards just like we use a knife so now we come to the most interesting question how we use credit cards in our favor in order to understand that first we have to understand the evil business of credit card yes I said it credit card is as a evil business but the secret trick here is to know this evil business so that we don’t allow this evil business to harm our financials and because many people don’t understand this evil business of credit card they end up falling into debt trap created by these credit card companies so now let’s try to understand what is this evil business of credit card 

Evil Business of Credit Card

So the credit card companies want you to spend more than you can afford so that you miss the payment of your credit card bills and once you miss the payment of your credit card bills the credit card companies are allowed to charge you interest of around 40 per annum and also a heavy penalty fees so to make it simple we can break this evil business of credit card companies into five parts or five steps:

1. Lure customers to buy credit cards

lure customers to buy credit cards by giving them big offers for example you’re going to get free movie tickets you are going to get free flight tickets 20 discount on this shopping 30 discount on that shopping and then you end up buying a credit card

Dark Truth of Credit Card | Credit card scam | Benefit of using credit card

2. Spend more than you can afford

They will make you spend more than you can afford for example if a person’s salary is 50000 rupees per month month then credit card companies will give you a superpower of spending up to 1 lakh rupees per month even though you are earning only 50000 rupees per month and here some of you might say that Bharat this is crazy I don’t think so anybody who is earning 50000 rupees would be willing to spend one lakh rupees per month that too on stupid things like food clothes restaurant movies etc etc if you think so then let me tell you an average office going person who owns a credit card spends at least 7000 Rupees to 10000 rupees minimum on swiggy and zomato food delivery orders and you might think these might be Bachelors no these are not just Bachelors this also include married couples and married couples with kids because nowadays it is so convenient not to cook but spend more on sweetie and zomato and credit card gives you the same convenience of spending on anything you like which you can’t afford but still you can afford because of the superpower credit cards I’ve given you and once spending on swiggy and zomato spending on shopping spending on buying online stuffs it becomes habitual then it is very difficult not to spend money on these things which are are innocent stupid but still these are tiny little stupid things on which you are spending money is contributing to dig that trap in which you are going to be trapped very soon and that’s how in Step number two credit card companies make you spend more than you can afford which is basically earning 50 000 rupees per month but ending up spending more than 50 000 rupees per month through credit cards  

3. Fall in a debt trap

The credit card companies make you fall in a debt trap which will potentially disable you for a very long time to pay your credit card bills on a time because right now your salary is 50000 rupees but with a credit card superpower you have ended up spending around 1 lakh rupees and when you get the credit card bill at the end of the month then you only have 50000 Rupees to pay your credit card bill and you will be disabled or not be able to pay for this remaining 50 000 rupees pending amount which you owe to the credit card companies and this is where credit card company will start to trick you credit card companies will say that it is only 50000 rupees you can pay it next month and we are totally fine with it we are there you don’t worry you just go shop more buy whatever you want we are there to support you and for all the support we are going to charge only a very small amount of interest of around 3.5 percent per month and you think that this 3.5 interest per month is nothing and you can easily manage it and you don’t mind carrying this 50000 dead burden to the next month and here is the point where you fall into the debt trap because this 3.5 percent interest per month will compound to 51 interest annually which is a gold mine for the credit card companies because if somebody takes a personal loan from the bank they end up paying around 12 percent to 15 interest rate to the bank but here credit card companies are getting a privilege to charge you four to five times the interest rate what an average bank is charging and that is why whenever a person falls into a credit card debt trap that person becomes a gold mine for that credit card companies because they can reap 51 annual interest from that person on the debt he owes to the credit card companies and little by little you pay massive amount of interest to the credit card companies but the trick here is that you don’t realize it because you pay it in smaller amounts or installments in every month if I give an example of it if a person continues to spend more and on an average has a 50000 payment pending on credit card then after one year adding 51 interest the person will owe around 75 000 Rupees to the credit card companies and if you calculate the same thing for five years then it becomes as much as 4 lakh rupees which the person owes to the credit card companies and this whole process is so smooth that you don’t even realize that you are in a credit card debt trap because the credit card companies had made you believe that you can buy anything you want using your credit card you can order food from anywhere you want you can travel to places you can buy new clothes you can go to movie you can do anything but the reality is that your spending habit has only created a illusion of richness and prosperity but in reality you are just a gold mine for the credit card companies and credit card companies are enjoying your hard-earned money in the form of heavy interest they charge on your default 

4. Trick you to miss your credit card bills

The credit card companies will trick you to miss the credit card bill payments and how they do it they do it through a strategy called mad which stands for minimum amount reduced so what is this minimum amount due let’s say that you get a credit card bill of around 30000 rupees then the credit card companies will act all humble and friendly and tell you that you don’t have to pay all of this 30 000 rupees you just pay as a minimum amount of thousand five hundred rupees and we will not charge you any late payment fees and many get confused thinking that for 30000 rupees credit card bill if I pay only 1500 rupees then for the remaining 28 500 rupees I will not be charged any other fees or interest and I can carry this 28500 rupees payment to the next month that’s what many people think but that is not the case because the late payment fees and the interest charged by the credit card companies are two separate things that means if you miss your 30000 rupees credit card bill payment due date then you will be charged a late payment fees which is on an average around 450 rupees and along with that around the three percent to three point five percent interest on the 30 000 rupees credit card bill which you missed to pay but now say before the due date you pay around 1500 rupees minimum amount due price or amount then the credit card companies are not going to charge you the 450 rupees late payment fees but they are still going to charge you the 3 percent to 3.5 percent interest on the remaining 28500 rupees of balance you are carrying it for the next month and now let’s say you make another purchase from your credit card for around 15 000 rupees and in the normal scenario you will not be charged any interest on this 15 000 rupees for 45 days because you have time till 45 days to pay this 15 000 rupees back to the credit card company but in this case where you are already carrying 28 500 rupees outstanding balance you will not even get a single interest fee period on this 15 000 rupees and from day one you will be charged interest on this fifteen thousand rupees which means now credit card companies will charge you interest on the 28 500 rupees original outstanding balance and also the 15 000 rupees new spending you have made the interest will be charged on that from day one 

5. All the odds are favoring the credit card companies

All the odds are favoring the credit card companies because you are not in a position to clear your complete outstanding credit card bill because you are spending more than you are earning if you miss the entire bill payment then the credit card companies are going to charge you late payment fees and also a heavy interest and say if you pay a minimum amount due then the credit card companies will let go the tiny amount of late payment fees but still charge you heavy interest on the outstanding balance and that is the critical point because from that point on whatever spending you’re making on the credit card is the golden ticket for the credit card companies because on that amount credit card companies can charge interest from day one and now technically you have become a slave to the credit card company because you don’t earn sufficient enough to pay the full credit card bill and also using the credit card you are now living a lifestyle which is above your earning level or which you can’t afford and now it is not easy for you to step down and downgrade your lifestyle and this is the evil business of credit card which has a trick to many people into dead trap and ruined their financial lives

Benefit of using Credit card

so now we have understood the evil business plan of credit card now let’s try to understand how we can use this business plan to favor us and save us money so if you remember the evil business of credit card companies had Five Steps step number one was they lure customers by offering them great discounts and offers and now we use these same offers to save us money and also get a lot of free benefits and now some of you might ask that you know if you buy a credit card for these offers and discounts then isn’t it that we are falling into the credit card trap where the next step is that we are going to spend more than we can afford and ultimately get into a debt trap yes you are right but if you remember credit card is Just Like a Knife you can cut vegetables and also you can cut your hand if you are using credit card for swigen zomato you are using a credit card for Mindless shopping or anything like that then you are using credit card to ruin your financial lives but instead if you are using a credit card to pay your monthly expenses which you are anyway going to pay from your debit card or from cash then here you will not end up spending more than you are earning and also at the same time you can utilize the offers and discounts provided by the credit card companies for example many credit card companies provide a five percent discount on payments made to groceries and households in Star Bazaar big Bazaar D Mart and even to online companies like big basket and suppose if somebody is spending around 25 000 rupees per month on groceries and households then he will be anywhere going to make this payment from debit card or from cash but instead if he makes this payment from credit card then he will be saving 2500 rupees per month just like that without any effort and in one year he can save up to 30 000 rupees just on groceries and households by just switching the payment method from debit card or cash to credit card which technically makes your one month groceries and household expenses totally free and also every rupee you spend on the credit card will earn your reward points and you can use these reward points to book free fly tickets or free movie tickets and also get additional discounts on your payments from the credit card and this way by moving smartly your monthly mandatory expenses from debit card or cash to credit card you can actually save a lot of money and also get a lot of free benefits and discounts from credit card and the secret trick of saving money only works if you are disciplined with a credit card and use it only for your mandatory expenses and not for Mindless shopping because if you are using it only for your mandatory expenses then at the end of the month you will have sufficient money to pay your credit card bill in total because your spending will be less than your earning but if you are using credit card mindlessly for shopping spree or for sweetie and zomato then you will be spending more than your earning which will effectively leave you in a credit card debt because at the end of the month you will not have enough money to pay your credit card bill in total which will force you to enter into the credit card debt trap and for that reason make sure only to use the credit card for your mandatory expenses and along with that in order to make this work it is also very very important that you pay your credit card bill on time or before the due date and if you have a wonderful memory then it is totally great you can remember and pay the bill on time but if you don’t have a wonderful memory like me then you can make use of auto pay features where you can pay your credit card bill automatically through the bank mandate and these days you also have a lot of apps like credit which will help you manage your credit card and pay your bill automatically on time or before the due date and this way by having a little bit of discipline and control over spendings you can actually save a lot of money using credit card and actually benefit from the evil business plan of the credit card companies because this evil business plan of credit card companies only work on those people who are not disciplined enough not to spend more than what they are earning and also don’t have much control on their spending habits but on the flip side if you are a little bit disciplined enough to manage your credit card more smartly then you should do just fine and also save a lot of money because as I had mentioned at the beginning of the blog credit cards are just like a knife you can use it to cut vegetables and you can also use it to cut your own and it depends on what purpose you use it

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