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o Internet <> o Gadgets <> o Household Technology <> * More <> o Personalities <> o Education <> o Boo s < s/> o Charity <> o Life Lessons <> o NRI Corner <> o Economics <> * Spiritual <> Tweet <> E-Mail <mailto:?subject=Chec this out&BODY=I found this article interesting and thought of sharing it with you. Chec it out:> Plastic Money Pros and Cons November 19th, 2012 by Sridhar

by Sridhar on November 19, 2012 Technology has changed the way we deal with money giving us more convenience and easy access to funds from anywhere. It all started with a simple credit card that allowed you to ma e purchases today and pay later.Further, technological advancements lead to a new trend where most ban s gave you one ATM card or debit card which can be used for withdrawing money as well as for ma ing purchases or payments offline as well as online. However, plastic money has its share of issues that one must be careful about. However, plastic money definitely provides an alternative in some cases and compliments cash as a medium. plastic money Plastic Money Pros and Cons < ian-woman-with-a-credit-cards-3/> Convenience of Plastic Money Peter, a young MBA graduate joins a large software firm as a Business Development Executive. His job involves frequent travelling and meeting with leads and clients to develop business for the organization. This requires him to spend a lot on travel, food, stay, etc and eep trac of his expenses. Since he may require a lot of cash for inter-city travel which can span a few days or wee s he preferred to use his debit card or credit cards. For instance he could use his card to pay for hotel stays where cards were commonly accepted. Similarly for travel he could boo tic ets

online, while for food he had to rely on cash. However, with his debit card he could withdraw cash whenever required which made his life easier. Even if he forgets to carry cash he can use his debit card to withdraw funds whether required. Advantages of Plastic Money There are several advantages of plastic money as seen in the above illustration. The advantages include 1. Eliminates the need for carrying huge cash: This eliminates the need for carrying huge load of cash which is ris y and inconvenient too. 2. Ris of Loss or Theft minimized: In case of cash there is a high ris of losing cash and a chance of cash getting stolen. However, in case of debit/credit card you can report the matter to the ban and bloc the card to avoid misuse. 3. Anytime/Anywhere Access Using cards you have the unique advantage and convenience of using it anywhere in the country or even abroad. 4. Credit Facility: In case of credit card you have the option of buying on credit or paying later. Although the charges are high, it helps you in case of emergencies and contingencies. 5. Online Payments: You can use cards for online payments, fund transfers and various other transactions. These are the ey benefits which I can easily remember, but there could be various other good features too that are specific to certain cards. Disadvantages of Plastic Money So far Ive been sounding li e a nice, pleasant Ban Executive who is convincing you to open an account. Please note a few points before we loo at the disadvantages of plastic money * Cards/plastic money is not a complete replacement for cash * Use of cards can also be ris y in some cases Note: Im not saying that cards are not useful because of these drawbac s. The disadvantages are just to ma e you aware of any ris s, threats, etc so that you can use it carefully. Some of the drawbac s or ris related to cards are *Non-Acceptance at Small Retail Outlets* Unless you are a person who shops only in supermar ets and hypermar ets you will be forced to use cash *Cannot be used for all daily needs* You cannot pay your mil man, servant, paper wala (newspaper guy), etc by card. *Loss & Misuse* Once a card is lost you have to immediately report it and get the card bloc ed to avoid misuse. Sometimes when you are not aware that you lost the card.the chances of misuse is higher.

Mr.Karthi , who was on a trip to Mysore & Bangalore returned to Chennai after 10 days. He was not aware of his card (which he lost during the trip). One fine day when he chec ed his ban account he found that Rs.75,000 worth of purchases have been made on his credit card. Too late. But this case is a little old. Today lot of chec s and balances have been put in place. For instance for debit card the customer has to ey in the PIN for offline purchases, and additional passwords/authentication for online transactions. Even then ta ing precautions is absolutely necessary. *Low Value Transactions* As discussed above already there are cases where small and medium sized retailers dont accept cards for low value transactions (say less than Rs.200 or other criteria). You may have noticed this even in case of outlets li e petrol bun s or restaurants. *Service Charges* In some cases the outlets charge additional service charges for cards. So this can be another burden on your poc et. *Damage to Card* Sometimes the cards magnetic strip gets damaged or scratches or cuts can render the card unusable. So eeping it safe and secure is very important. *Carrying or Keeping the Card* Keeping the card and cash in the wallet together is li e inviting trouble. This is the way everyone (including me) used to carry cash and cards. But this means once you lose your wallet you lose everything. So here the card doesnt come to your rescue after losing cash. The best practice is to eep cash and cards separately so that if you lose one you have the other to ban upon. By the way, nowadays I dont carry cards in my wallet. Its mostly in the bag or sometimes in a different poc et. You can try this or other methods but ensure that you dont eep everything in one place and lose it all.Now that we have a clear idea of some of the drawbac s of credit and debit cards lets also loo at some ey points on how to stri e a balance between use of cash, cards and control your spending habits. Spending Habits & Other Tips Whether you use cash or cards, having a control on your spending is very important. A few pointers would be worth noting. *Impulsive Purchases* Dont yield to impulsive purchases. Try to see what real benefit or value are you getting from the purchase. If you cant live without it you can postpone or eep the spending on hold. *Peer Pressure*

Its o ay to spend some money on entertainment, outing, fine dining, etc. once in a while (say once or twice a month). But if you do it every wee on instance of your friend, colleague, etc you will have not savings every month end. Your future financial planning is out of question if you live from pay cheque to pay cheque. So its time to become smart and avoid unnecessary wasteful expenditure. Sometimes you may have to attend a few parties, dinner/lunch activities, etc but prioritize and attend only the ones which are important and add value to you. For others you can say sorry and avoid or try to finish it over a simple coffee. *Overuse of Cards* I find that people who are finding cards as a convenient medium try to use it everywhere left, right and center. Further, they have 3-4 cards which are used one after the other at different places. I would advice them to have fewer transactions so that it is easier to eep a chec on the transactions every month and easier to pay the bill as well. *Special Offers, Discounts* Some people have this fancy and thin that they are smart when they get special discounts on cards at retail outlets. Ha ha ha ha What a jo e! Do you thin the card company and the retail chains are so ind enough to serve you at a discount. They want you to loosen your purse and spend more so that they can laugh all the way to their ban . *Debt Trap* Overuse of credit cards and rolling over your balance is the shortest route to ban ruptcy. Remember that you have to pay your credit card in full. If you now what this means in letter and spirit you will be careful while spending on your credit card. The interest rate on credit card roll over is as high as 3-4% every month which translates to 36%-48% every year. *Cash Management (Running to ATM often)* Most people particularly those who started their careers in the last 3-4 years have been more used to cards than cash. They dont carry much cash and dont eep cash at home <> too. This is absolutely disastrous. When someone at home has a medical emergency or has to buy groceries or do some major repairs cash in hand is absolutely necessary. Ive seen people who often run to ATM when they want to purchase some groceries. Surprisingly some people dont even eep Rs.1000 at home when they actually earn more than Rs.50 per month. This is not anjoosi but overdependence on cards, which is foolish, because you still need cash for most of your expenses.


up plan in case of Loss or Damage to Card

In case of loss or damage to card (ma ing it unusable) you have to apply for issue of a new card. The new card can ta e a wee or even more to reach you. Till then you need to manage with cash or rely on other debit cards. So two things to do to have a sound bac up plan * One is to have sufficient cash at home to handle 1-2 months expenses * Two is to have two or more debit cards (separate ban accounts) so that you are not dependant on one source alone I thin tal ing about cash or cards may sound li e a trivial subject, but remember that these precautions discussed above will help you during emergencies and help avoid or eliminate many problems that people face-not because of plastic money but due to lac of discipline and poor organization s ills. So use cash and plastic money wisely to have complete peace of mind. Tweet <> <mailto:?subject=Chec this out&BODY=I found this article interesting and thought of sharing it with you. Chec it out:> Related posts: * What is an ATM Card? Pros and Cons of ATM Card <> * How to Save Money Practical Tips to Saving Money < /> * True value of Money Money should be Respected and Valued < d-valued/> * How to use ATM Card Tips for Safe Usage <> * Using Debit Cards in India Tips on Usage <> Article by Sridhar <> Sridhar has written *77* articles. Sridhar is a financial analyst and his wor experience spans areas of financial analysis, modeling, valuation and research on companies, specific sectors, etc. Sridhar is an MBA graduate with Finance major from Maharishi Institute of Management.. 1 Comment {read them below or add one <#respond>} <> Hiten <> November 20, 2012 at 12:40 am <#comment-18197> Hi Sridhar, This was a great post on the advantages and disadvantages of credit cards. As you quite rightly said, there are a number of ris s associated

with their use. They can definitely create a false sense of there being more money than one really has, so that a person continues using it. Also, credit card fraud can be a massive problem if someone steals our card. Reply </plastic-money-pros-and-cons/?replytocom=18197#respond> Cancel reply </plastic-money-pros-and-cons/#respond> Leave a Comment Name * E-mail * Website Notify me of followup comments via e-mail Previous post: Family Roots and its Values <> Next post: Forgiveness is the Key to Happiness < ey-to-happiness/> * Stay Connected o <http://www.faceboo .com/wisdomtimes> o <> o <> * * Favourites o Manage Your Money Online Benefits and Ris s < s/ > o Financial Planning for Young Adults Myth and Reality < -reality/> o Surya Namas ar A Complete Health Pac age < ar-a-complete-health-pac age/> o What is Love True Meaning of Love <> o Responsibility in Children Helping Children Learn Responsibility <> o Investor Types What Type of Investor are you? < /> o Positive Energy can be Attracted Tips and Methods <> o How to Invest in Stoc Mar ets in India < -mar ets-in-india/>

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