Of all things evil and tempting there is none worse than the credit card.
Credit card cheerleaders come a close second. These men and women are telemarketers who spend their days as the proverbial devil on many a shoulder.
“Do it. Get a credit card,” they urge, while the persons they are harassing should know better.
I will never forget the first time a credit card cheerleader called me. At 19, I was a first year student with zero understanding of finances. The man persuaded me to apply for a student credit card with a R200 limit.
How silly! I kept spending the money and the bank had made a large percentage of it out of me when I closed the account.
I had just graduated and had not yet earned my first pay check. A woman – her name was Beryl or something – called. She alleged that I was “one of a select few” who qualified for a specific credit card. As my bank balance was 0.00 at the time, I informed her that they had set the bar pretty low. I put the phone down and received an application form via e-mail days later.
Explaining that I did not want a credit card was futile. In order to persuade me, Beryl sketched a hypothetical scenario. “What if you are in an emergency and need money urgently. Would it not be prudent to get a credit card?” she asked. I gave in and ended up paying R2000 interest after having maxed my “emergency” credit card.
Another ridiculous argument came forward. “If you repay the money you borrowed within 57 days, you won’t pay interest on the amount you borrowed,” she coaxed. “Dear, I don’t have money to begin with. How will I repay debt in a flash if my lack of money necessitates the debt?”
Credit card debt interest is around 18 per cent, whereas a personal loan’s interest is about 11 per cent.
If you must borrow money, it really is a no-brainer. Don’t go the credit card route. In fact, avoid borrowing money at all if you can.
The High Court in Cape Town recently set aside parts of the National Credit Act. Income verification – even for customers who can produce payslips and bank statements – will no longer be necessary.
This has “bad idea” written all over it. The National Credit Regulator thinks so too. It urged credit providers to apply the standards for income verification to protect themselves and consumers from reckless credit providing.
Readers are welcome to tell me how they feel about this. Do you think that this will promote reckless credit providing? Will it make you more reckless with borrowing money if there’s one less hoop to jump through?
Please comment using Lowvelder’s social media platforms. I would love to hear from you!
Also read: Liewe Kredietkaartsmous
Also read: Telebemarker, ek waarsku jou!
