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Credit Cards: Advantages and Disadvantages | Are Credit Cards A Boon or Bane? - YouTube
Channel: The Urban Fight
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(Telephone rings)
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Arey baba, I DON'T want your Credit Card..
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..Who gave you my number?
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If banks are really after us to get a Credit Card,
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then there must be... 'Daal me kuch toh kaala'.
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But if thatâs the case, why did BILLIONAIRE..
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Kevin O Leiry gave his son this adviceâŠ
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"I told my son, as soon as you get it, Trevor... put $50 on the card and pay it off."
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Billionaires also get a credit card, even when they donât need itâŠ
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because there are some secrets about Credit cards..
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that can help you get rich..
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and by the end of this video, I am going to tell you those secrets.
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So, in todayâs video are going to seeâŠ
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 3 Disadvantages of using a Credit Card
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3 Advantages
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1 Secret Advantage where this piece of plastic
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can help you buy a house.
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And towards the end, Iâll give you a Bonus Tip to help you understand
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how to use Credit Cards wisely.
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But before that, if you like our work,
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make sure you smash that 'like' button.
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Letâs begin
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So, you know what a debit card is right?
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Itâs a card that deducts money from your bank account every time you use it.
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But using a Credit Card is like taking a quick loan from a bank
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and you have to repay back this money to the bank
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within a billing cycle, which is usually for 50 days.
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These 50 days are your interest-free period.
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Does it mean you can spend 10 Crores using a Credit Card on your first day?
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Not really.
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Your Credit Limit, i.e how much can you spend using your Credit Card
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is decided by the bank, based on your...
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Income level, Credit Score⊠so on and so forth.
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So basically, CREDIT Cards give people money that they donât have.
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And that creates problems.
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Problem #1: They Promote Impulse Buying.
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Every website you go to, will show you an adv.
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Infact, you must be seeing one right now.
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Itâs not wrong to buy. But when we are not in a good place mentally,
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just to get a quick buzz, we buy shoes we donât need
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or that 5th Game of Thrones T-shirt that just lies at the back of a closet.
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This kind of impulse buying is pushed further when you have a credit card,
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because with a Credit card you donât have to pay now, you can pay later.
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So, if you already have these emotional issues to resolve first,
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then credit cards might not be your friend.
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Infact, comment below and tell me
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what was the last purchase you made that you regret?
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Was it a midnight ice cream or a T-shirt you already had
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or shoes you didnât need.
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Problem #2: They put you in a lot of DEBT.
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Interest Rate of Home Loans... is around 8%.
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Car Loan.. around 10.
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Personal Loan⊠around 12
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Do you know whatâs the interest rate of Credit Cards?
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Between 24 to 42% per annum.
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Matlab bhaiyya, if you pay back the money to the bank
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within your billing cycle then okay⊠0 interest.
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But if you default by just one day, then hereâs what happens.
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 You have to pay interest not just for one day,
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but starting from the day you made the transaction.
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Assuming you made it at the start of the billing cycle
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then your interest is on 51 days, not just 1 day.
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 Late payment charges will be applied.
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You have to pay 18% GST on the overall interest accruing.
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And God Forbid, if you make a new transaction, before paying off this old amount,
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then this new transaction wonât have any interest-free period
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and itâll start attracting interest from Day 1.
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Apart from these payments, 2 solid ways that Credit Card companies make money are thisâŠ
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If you withdraw cash using your Credit Card,
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then you start paying interest right from Day 1.
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Credit card companies tell you... 'Oh, so you have to pay 50,000 this month?..
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Donât worry.. just pay 5% of it .. i.e the minimum amount due..
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and you wonât be charged a late payment fee.'
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You think itâs a boon, but itâs not.
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Because you will still end up paying high interest rates on the remaining amount.
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So the day you get your Credit Card, Swear to God
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that no matter what, you will pay your dues on time, because if you donât⊠Â
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Problem #3: Credit Cards can spoil your CREDIT Score.
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Now, listen to this very carefully.
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A credit Score is a 3-digit number, ranging from 300 to 900.
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This score is used by banks, credit card companies or even Insurance agencies
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to decide whether or not to offer you credit and what the interest rates would be.
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Means, if you want to do Business or even have 'Ghar-Baar-Bacchey' in this countryâŠ
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then having a good Credit score is very important important..
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In India, there are some of the bureaus that keep track of our Credit scores,
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like CRIF, CIBIL.
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Iâll tell you more about this score later, but for now, remember thatâŠ
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this score should never go down.
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But if you donât pay your Credit Card Bills on time⊠it will.
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You can even keep track of your CREDIT Score through apps like CRED
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which allow you to manage all your cards at one place
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and even rewards you every time you pay your bill on time.
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Iâll tell you more about CRED later.
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For now, those were the 3 problems of having a Credit Card.
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But just like that Gulab jamun on my Veg Thali, I save the best for the last.
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So, here are the Top 4 Reasons why Credit Cards are greatâŠ
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1. Credit Cards have⊠Benefits.
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If they are charging you so much interest, surely..
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they must be offering something in return first.
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Depending on the Credit Card you opt for, you can get benefits like..
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But getting a Credit Card just to get free food at Airport lounges is silly.
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The more important benefits of Credit Cards areâŠ
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2. They are Universally Accepted.
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I bought my first Credit Card in 2012,
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when I had to travel to US for work, alone.
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It was my first international travel and I was told that Debit Cards might not work everywhere.
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So before I left, I bought myself a Credit Card and thanks to it,
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I had no issues grabbing a quick meal in between a connecting flight
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at Heathrow where the currency was Pounds,
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paying for the cab from airport to the Hotel,
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and checking in at the hotel where the currency was Dollars.
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And when I went out to see the world,
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it worked at all stores and amusement parks.
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They also work across multiple websites,
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whether you want to buy an online course or set up a recurrent transaction at Netflix..
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But if you are using them everywhere,
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surely safety must be a concern.
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Which is why, they also offerâŠ
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3. Strong Buyer Protection
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These days, we seem to make a transaction at some new website every month.
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The good news is, Reserve Bank of India has shifted the responsibility
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of proof of customer liability to the bank.
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Which means, if you donât get your order, you can ask the credit card company
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to raise a dispute against that transaction.
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This is called âChargeBackâ and it protects you from fraudulent transactions.
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But read the terms and conditions of your Credit Card carefully
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to ensure that they do offer the âCharge Backâ benefit.
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And now is the time for the Secret AdvantageâŠ
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4. Credit Cards⊠build your Credit Score.
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In that video, this is what Kevin OâLeary was really sayingâŠ
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'I told my Son, Trevor... put $50 on the Credit Card and pay it off..
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..and now he has got a pristine Credit Rating and he has only
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every put a few thousand bucks through the card.
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Everybody should understand that...
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There is no way to game that system.
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You've got to establish your Credit Rating or you can't borrow.'
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As he said, you must establish your Credit Rating.
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As we discussed earlier, Credit Rating or Credit Score is a very important number
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and one of the ways of building it, is to get a Credit Card,
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use it to spend small amounts, but repay it back immediately.
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This repaying on time, over the years, is what will build your score.
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And when you have a good Credit score, this is what happensâŠ
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You can get a good premium for insurances.
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You can negotiate the interest rate on your Credit Cards.
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But most importantly, youâll get a better interest rate on your loansâŠ
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be it for Education,
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starting a Business or
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to get your Dream House.
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To give you an example, this house that we are staying in,
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has a loan on my name. Me and my husband took a joint loan,
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but I have a better Credit Score and the bank said that the interest rate
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would be lesser if it was taken on my name.
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And thatâs how a good Credit Score helped us
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land a good house at a good interest rate.
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 In short, a Good Credit Score = A happy Life.
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Because it can help you with your education,
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with your business and even your house.
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One of the apps that help you maintain a good Credit Score is, CRED.
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This video is in association with them, because I have been using CRED since 2019.
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Before I give you the Bonus Tip, let me quickly tell you about them...Â
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Iâve been a CRED member since 2019 because in one of the talks,
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I heard their CEO Kunal Shah, saying that CRED is not just an app.
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Itâs a tribe of people who make good financial decisions.
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And I wanted to be a part of this tribe.
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I have 2 Credit Cards, American Express and ICICI..
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and I manage them through CRED.
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As you can see on the top, every payment gave me CRED coins,
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that I have accumulated since 2019.
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And I can go to the Store, check out the offers available
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and use my CRED coins to avail these offers.
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I am not bragging but that is my CREDIT score.
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Not bad, eh?
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It means that I follow what I preach,
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I pay my bills on time, I maintain a good score
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and I only promote what I believe in, or use.
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So read all about them and if YOU think CRED is where you want to be,
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then download the app using the link below,
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enter your name and mobile number
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and CRED with automatically fetch your credit score.
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Remember, you can only be a CRED member only if
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your credit score is 750 and above. Good luck. :)
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I think by now you know that Credit Cards can either make or break you.
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So to use them wisely, I am going to give you a simpleâŠ
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The Urban Fight copyrighted formula.
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While using Credit cards, remainâŠ
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SANE.
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Chadar jitni hai, pair utney hi phailao.
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You are not taking Credit Cards for money,
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but to build your Credit Score.
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Auto-debit helps you from falling into the hell hole ofâŠ
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paying interest, taxes, late feesâŠ
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and getting a bad Credit Score.
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Because, why?
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Extensively research about your Credit Cardâs..
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Annual Fee, Interest Rates, Hidden Charges, Credit Benefits
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and read the Terms and Conditions carefully.
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The job of an agent is to just sell you a Credit Card,
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itâs your job to find out whether that Credit Card is useful for you or not.
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So todayâs Bonus Tip is this..
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While using a credit card, remain SANE.
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Because thatâs the only way to use Credit Cards wisely.
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Another way to remain sane is..
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to 'Subscribe' to our channel and hit that 'bell' icon,
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because we make Career, Finance and Communication videos, regularly.
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And don't forget to share this video with your friends
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who donât have Credit Cards (or even have them!)
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I am Taskeen and Iâll see you in the next video.
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