I was in the secondary school ( barely 35 years back) , when my teacher in Economics told us that ” credit is the heart of all business”. Well, considering that I was too young then to take the subject seriously, I didn’t bother for an elaboration.
Until now, having a small-scale business, that lecture in the said subject has been instilled in my mind . Take for example the use of credit cards. Obviously, majority of the citizens now have at least 1 or 2 credit cards. How do credit cards work both financially and technically? If used wisely, it can provide convenience and allows the holder to make purchases with few weeks to pay for them before charges and penalties kick in. Sounds great! But wait- many consumers carry large balances from month to month, with finance charges that can go to a whopping 20+% or even higher. And who gets richer? Of course, the promoter of the credit cards.
So why not resist using credit cards for impulse purchases or buying things we really can’t afford? Before I take the plunge, I ask myself- Is this thing that I am going to buy really important? I have to be sure also of my financial capacity. I have to believe that if I can pay cash- I’ll go for it! Why? It is because.. if I can’t pay cash, I cannot afford it! Right?