PAPER OR PLASTIC- -- WHEN ITS TIME TO PAY
By Dr Nitin Mehta. ( M Sc , PhD, FICN, Dip .in Lib .Sc &Hosp. Admn. )
With the Festival of Lights over & we entered into another new year Samvant 2064, its now time to check our bills for the purchase done for the festival. Spending smart is not just about you buy but how paid. By paper or plastic & or cash .We all know paper is cash and personal cheques, while plastic is credit/ debit cards. Which should you use? It can be a hotly discussed topic at home. With your spouse & growing children opt for easier mode of payment i.e. credit card, or cash, it’s you in the end , how disciplined you are with your money. There are pros & cons of using any one of them.
Cheques are inconvenient, it takes time to to fill it , keep record & most merchants don’t accept against immediate delivery. However, there is little float time in transaction is very much less with electronic processing. There are chances of fraud &identity theft. Cheque “washing” is a scam carried out meticulously, cleaning out your bank account in a jiffy.
Cash, you have to go to ATM or bank to withdraw cash. even though you spend less, there is no automatic record of spending that you get regular credit card
Bills or bank statements.” Mugging “is also possible where you lose all your cash, as opposed to cancel payment by credit card or cheque. Nowadays one can draw actually more money from an ATM in a day, probably thanks to courtesy overdraft protection, but may charge an overdraft fee & impose high interest .This also is possible for overdrawing your account by cheque or debit card. To avoid this keep track of your spending & one may instruct bank to use money from other account of yours.
Debit Card is a more convenient form of cash, most double as ATM card. They are widely accepted, easier to use, can keep record of withdrawals, & avoid any bank charges, plus in some cards you get reward points But beware of pick pocketing /misplacing one may be charged a fee if not reported to bank within say 48 hours. individual card companies probably limit the debit liability but may take weeks one can start reusing the account.
Credit Card unlike other modes one puts the bank’s money at risk. One can dispute a charge & bank deals this with the vendor This card builds one’s credit history , so one can avail facility of lower rates on any products , get more perks ,like airline miles ,cash rewards, & points. But late payments & over the limit fees are punitive, as consumer frequently spend more & so many face disadvantages of credit cards. Many cards give facility to deduct from the one’s bank account “automatically” if such instructions are given to the bank. But if one is careful in spending &keep an eye on bank balance all advantages of a credit card are for the consumer .As more people use plastic to pay for purchases many shops & restaurateurs play afoul of the rules designed to protect the user’s personal data. All users should be aware that information be prevented from falling into the wrong hands. The magnetic strips on the backs of the card contain all information, viz, name, account numbers expiration dates , security codes too., the computer “captures” these information, such data puts card holder “at risk” & computer hackers use this data for fraudulent purchases . Consumers typically aren’t liable for such purchases but will disturb their lives. Of course, the card industry allows such data to be stored by the merchants, but storing special 3-4 digit security codes on the back of the cards are sensitive. The card industry should upgrade the systems at regular intervals .and guide the shop keepers not to store any such information that goes against the user.
In recent months, Reader’s Digest, US ed. Aug 07, Business Week, US ed. Oct 07, Wall Street Journal, 20 th Nov, 07, published articles on various aspects of Credit/Debit cards.
RD’S, article, mentions how new credit card tricks and traps can ruin your life. In 2005, US consumers used 691 million credit cards to spend $1.8 trillion. An average credit card late fee is $ 34. Since 1995, it has increased 162%. Instances have been cited where many dug a hole in the pocket by paying higher interest in debt Business Week, mention California lawmakers in mid-September voted to ban credit card companies from using T- shirts and other freebies as marketing gimmicks at public. .College kids are a potential gold mine. And they are loyal , eventually taking three additional loans. On average, before the bank issues the credit card.. While WSJ, published that banks offer flexibility in combining rewards, payment choices even as many make their coverall programs stingier. Some credit cards are offering cash-back and other awards in more places, but consider the levels of rewards might be less generous than with previous cards, may place limits on how much user can earn in bonus points .If you carry a balance, consider a non rewards card , which may offer lower interest rates. Yet many consumers are finding ways to juggle their credit cards to get the maximum rewards from each.
One should not just jump in this – not carried away by marketing gimmicks, and try to discuss with friends or customer care services of the card issuing companies.
If you don’t understand or satisfied, just drop signing, so as to land into trouble and difficult to come out. You remember it’s like Abhimanyu Kotha.
