Swipe, swipe, swipe!
How sweet it is to swipe your way through life. Swipe to shop. Swipe to travel. But hold your horses, shopaholics, credit cards are an affordable luxury, but if and only if you keep them under control.
“When I shop, the world gets better, and the world is better, but then, it’s not, and I need to do it again,” so says our favorite funny fashionista Rebecca Bloomwood in Confessions of a Shopaholic. But when it is payback time, Rebecca found herself bankrupt, unable to swipe her way out of financial ruins. What a shame.
The same embarrassment happened to finance company executive Frank McNamara. It was 1949 and Frank was dressed to the nines, ready to meet his friend, Alfred Bloomingdale, grandson of the founder of the Bloomingdale empire. They had dinner at a New York restaurant, but when it was time to pay, Frank, who thought he had cash on him, realized he left his money in another suit. He was penniless. According to dinersclub.com, “He resolved never to be embarrassed again” and in 1950 went on to found the Diners Club, the first multi-purpose charge card in the world.
Alfred, his dinner companion, predicted that there would only be two kinds of people: Those with credit cards and those who couldn’t get them. More than 50 years later, the world now carries the indispensable plastic.
According to statisticbrain.com, there are 176.8 million credit card holders in the US alone. Creditcards.com says there are 7.37 million credit cards in circulation in the Philippines. The same website also breaks down the purchases by credit card in 2012: Clothing (67 percent), gas (64 percent), food (64 percent), and travel (62 percent).
Frank had a noble intention when he invented the plastic wonder. “It is convenient, great for emergency purposes, offers special deals, and gives opportunities to build your good credits when you pay back money on time,” says Security Bank card deputy head Gerry Dy. A credit card saves you from holdups, gives you convenience to buy major items without cash, and showers you with perks. Security Bank, for instance, offers the Diners Club card, a specialty card for travel, dining, and entertainment. The Diners
Cardholders, in general, can avail of exclusive travel promos and leisure and lifestyle deals with local merchants in partnership with a credit card brand. Majority of credit cards are accepted worldwide. Sounds fun, right? But here’s the fine print: It is important to note that using any credit card is still a form of borrowing and comes with risks. If you don’t pay off your balance in full and on time, the interest can spike, while your debt, if you won’t pay on time, can quickly spiral out of control. The article “Credit Card Basics: Everything You Should Know” by Luke Landes, published in Forbes, says that according to scientific studies, “people are more likely to complete a purchase if they intend to pay with a credit card than if they intend to pay with cash.” Recent statistics by the Bangko Sentral ng Pilipinas says that the total credit card debt in the Philippine banking system is P157.394 billion.Club card offers access to more than 500 airport lounges worldwide, from Tokyo to Thailand, from the Philippines to Pakistan. The credit card lets you escape from the commotion of some of the busiest airports in the world, thanks to its extensive network of international airport lounges, replete with butlers.
Rebecca, in her crazy attempt to cut down her shopping frenzy and inability to pay her bills on time, puts her poor, poor credit card in a container full of water and lets it freeze in her fridge. While you can always try her tactics, here are three sure-fire tips to save you from financial ruin.
- Resist the urge to shop for unnecessary items. Ask yourself, is a new bag a need or just another accessory?
- Pay in full and on time to save you from increasing interest rates.
- If you’re not strong enough to resist temptation, leave your card behind.
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