On Credit Card Debts

A couple of months or so, I personally know of several people arrested by police due to unpaid credit card debts. And several more people who are in danger of having arrested if they still fail to pay the skyrocketing arrears on their credit card debts.

By the way, in this part of the world, the UAE (United Arab Emirates), non payment of your debt is a crime, not just a simple civil case. You could be imprisoned for non payment of your debt.

Banks are resorting to aggressive measures as a result of this depressed economic situations. For during those heydays several years back, they were reaping huge profits from the consuming public, who happens to be you and me.

The credit card system can be likened to a one-on-one game. A game played by the financial institution issuing the credit card and the credit card holder. All rules of the game is obviously created by the issuing institution. Majority of these rules (take note, I said majority and not everything) are to their advantage. The cardholder then is left with a minute part of the set of rules that are to his advantage.

Does it mean that credit card is bad? No it is not. But, incurring credit card debts is. If you just know the rules that are to your advantage, you can avoid credit card debts. And if you are trapped by the rules set to the advantage of the credit card issuer, then you are in big trouble.

You may incur credit card debts if and when: (a) you purchase on installment using your credit card; (b) you pay less than the total amount due reflected on your bill as it matures; or (c) a combination of (a) and (b).

The obvious solutions not to incur credit card debt are: (a) spend within your means; (b) pay the full amount reflected on your credit card bill before it matures; and (c) do not acquire one, if you do not have any.

Now, if credit card is not bad after all, so what good does it give you?

p.s. this will be the first in a series of articles that i may write about personal finance. i hope and pray that i could produce an article about personal finance every other week. so if this article is helpful in anyway to you, my contacts, pls feel free to write your comments, suggestions, or any reactions.