Working professionals spill it all about their spending habits. In this edition of our series, we speak to someone who owns four credit cards and thinks nothing of the extra interest charge when he doesn't pay all his bills on time. He says he looks at it as a convenience fee.
Name: Aalaap Ghag
Age: 28
What I do: Web technology research at a software services firm
My credit card bill per month: Rs 5,000- Rs 15,000
BUY now, pay later is Aalaap's spending mantra. You can shop anytime, anywhere. Aalaap has four credit cards and thinks of the interest charge as a convenience fee.
"I have four cards, but I actively use only one, except in emergencies, like the time I travelled to the United Kingdom," says Aalaap.
Even though he had cash on him, he is thankful to his credit card provider. He used his card to make an urgent hotel booking online on the hotel web site in the middle of the night. "Even though I knew there would be additional charges which I would have to pay when I got back home, I did not mind it. Convenience, I say."
What he buys with his card
He buys all his car accessories with his credit card -- car wheels, music system with subwoofer, lights and so on.
Does he forget to pay his bills on time?
"Never. I always pay at least some amount on time. For instance, I may make a part-payment of Rs 10,000 every month or so, and then clear it a few months later.
"I just find it convenient that I can buy something right now even if I didn't have 50 grand in my wallet."
He adds: "Yes, of course, most establishments make nakhras about paying by card for amounts smaller than Rs 200. So it is best to carry some cash. And there are still a lot of places that don't accept cards at all."
Aalaap has his own interpretation of the interest charges: "Don't think of it as interest. I think of it as a convenience fee. You take home a 32-inch (81 cm) LCD television without having to worry about the money for at least a month. Then you pay it in four installments. Your money kept in the bank also accrues interest. So you get some interest here and you pay some interest there. At the end, it all levels out."
The dangers of overspending
"True, but I would be depriving myself of a lot of luxuries I can indulge in with my card."
The logic behind having multiple cards
"Honestly, I use only one card. It is easier to manage and track your expenses. Multiple cards may give you more credit, but they also increase your monthly part-payments."
Aalaap has some learnings to share
~ For new credit card users, the smart thing to do is reduce the limit from the default (sometimes Rs 25,000) to a more conservative Rs 10,000.
~ Learn to handle the card at that amount for a few months. Then increase the limit.
~ Think twice before buying anything. Make sure you have money to pay the bill at the end of the month!
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What is YOUR story with credit cards? Are you spend-happy? Or do you believe in using cash only? What are your experiences? Write to us, mentioning your name, age, profession and the city you reside in. We would love to hear from you!
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