Chit Fund Loans

Chits (vs) Credit Card

Credit card is a convenient way to spend money. It entices the customer as he does not have to shell out any money when he makes purchases at a retail store. It also induces him to spend more than he can actually afford with the BUY NOW – PAY LATER mantra. The bank at the end of the billing cycle, which is usually at the end of the month, allows its customer to pay a minimum balance instead of the full amount allowing its customer to carry the remaining balance to the next month. The bank allots a higher credit amount without giving much thought to the paying capacity of the customer. The customer falls into this trap by buying more than he can afford, paying the minimum balance at the end of the month, transferring remaining balance to the next month. This becomes a vicious cycle. Little does the customer realize that he is charged exorbitantly almost up to 40% when the credit card balance is revolved in this manner? He gets caught in the credit card debt trap. A smart investor would want to use the SAVE-BORROW-PAY mantra instead of BUY NOW – PAY LATER. He would save at a higher interest cost, borrow at a lower cost and rescue himself form unnecessarily exorbitant interest costs. This is possible by having financial discipline and by planning, investing and saving and borrowing using chits.