Credit Cards Are Evil

 All my life I’ve stayed true to the belief that credit cards are evil and debt is the number one enemy of the modern world. My sole principle was to avoid getting into any sort of debt. I grinned every time I see an innocent citizen wallowing in despair as they struggle through the vicious cycle of credit card debt. Never in a million years would I have imagined that I would eventually become that person.

It all started when I was at an Aeon mall with my family in 2017. Right after buying some groceries at the supermarket, I went to one of the Aeon booths to apply for a new J-card (a card for collecting points). The employee offered a credit card application, but I declined. I told him I only wanted a new J-card. With my daughter in my arms, the dude helped fill-up the form for me. He started out by asking my name, address and so forth. As soon as these questions got a bit too personal, I started to realize that this is not just a J-card application. He was asking about the amount of my salary and stuff like that. I reminded him that all I wanted was to apply for a J-card. He nodded saying this is an Aeon credit card application which also includes a J-card. Trying to remain polite, I just accepted this thinking the application might probably get rejected anyway as I don’t really make that much money to warrant myself a credit card.

Lo and behold, the application got approved and they mailed the card to my house weeks later. As outraged as I was because I have always been against the very idea of credit cards, I was rather curious about how it works. It was the first time I get to hold my very own credit card in my hands. I thought to myself, “does this really work?”. I then activated the card and that is how it all began.

My first transaction was filling fuel to my car. I was like “whoaaaaa! It works!”. I was exposed to a whole new level of financial freedom, unaware of the consequences of overspending. I had no idea what credit limit was and what reaching that limit meant. I had no idea about interest rates. I had no idea what kind of damage these seemingly small amounts of finance fees, annual fees and bank charges can do in the long run. I had zero knowledge on how to use a credit card responsibly. To be fair, I didn’t use it excessively. I just use it a few times at the end of every month for fuel when I run out of money, and occasionally a nice dinner or two with the family.

To my surprise, I couldn’t afford to pay back in full whatever spending I did the month before. I paid what I could, and in the end, the amount accumulated and reached the credit limit. It was then that they called me, telling me I should pay at least the minimum amount. This is a huge no-no in the credit world. Unless you can’t avoid it, never pay the minimum.

The minimum payment is a pre-calculated amount, designed to keep you paying for the rest of your life. For example, if it takes two years to settle the debt with minimum payment, you’d think you’d do just that. But during these two years, you also rack up a chunk of amount in interest, bank charges and other fees, extending the 2-year settlement period to perhaps almost 3 years. Add up other spending that you do with the card within the 3-year period (which we usually will), the debt settlement period now extends to 4 years, then 5 years and so on.

This is what most people don’t realize. They spend the card to its limit, they pay the minimum each month and before they know it, they have been paying up for over 7 years and still counting. This is how credit card issuers make their profit.

 But credit cards aren’t always bad. It’s only bad for those who don’t know how to use it properly. For others, it is a very powerful tool that makes their lives much easier. For me, after managing to pay it in full, and then hitting that limit again not twice but three times now, I think this is not the tool for me. I can’t seem to learn to use it the right way. So I’m settling the debt once and for all and once I do, I’m cutting up the card with a pair of scissors, and let that be the end of it.