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Recently, D and I made two major purchases for our home. On both occasions, we paid for the respective purchases in cash. On both occasions, however, I could have made the choice to use my credit card.
On the first purchase, I would have earned 250 reward points.
On the second purchase, I would have earned 380 reward points.
On the first purchase, I would have also earned Rs 400 in cash-back (the store had a cash-back scheme if you used XXXX Bank’s credit card and I happen to have one).
But, on both occasions, I chose not to.
For me, 630 reward points and Rs 400 in cash-back aren’t worth carrying a 6-figure liability (the credit limit set on my credit card) in my wallet each day. Sure, I could have slipped the credit card into my wallet on the day of purchase, but I’d also have to remember to take out the credit card upon returning home. Now, how many among us actually look inside our wallets each morning? You wake up and you rush to work. Taking out the credit card from you wallet is the least of your worries each morning.
And yes, you could argue in favor of the Card Protection Plan. But why would you ever want to pay someone each year just so that you can have peace of mind when you’re spending money that’s not even yours to begin with? To me, that’s the wrong peace of mind. Credit Card. Credit Card Protection. What next?
In my opinion, a credit card in your wallet is akin to a time-bomb waiting to diffuse. Plus with lost-card liability policies generally being in favor of the card issuer, your problems only compound. It’s not that I abhor credit card usage. I do use my credit card — but only when there are absolutely no other means to pay for that transaction. Even then, I first ensure that there’s cash in my savings account to settle the bill — in full.
What do you think?
Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.