The Credit Card: A Double-Edged Sword in the Financial
Arsenal
At the Office of Bharadhwaj
Investsmart
The late afternoon sun
filtered through the blinds at Bharadhwaj Investsmart as Vaidy wrapped up his
paperwork. Just then, Rohan walked in with an excited look.
“Chita, my friend Sharan just
got his first proper job in a travel and tourism company. They’ve already offered him a credit card. He wants to
understand whether it’s really useful or risky. Can you talk to him?”
Vaidy nodded and dialled the
number. “Hello, Sharan? Welcome to the corporate world! I hear you’ve been
offered a credit card.”
“Yes, sir,” came the eager
reply. “Everyone at the office says it’s amazing, rewards, cashbacks, and super
convenience. But a few friends warned me it can trap you in debt. I’m
confused.”
Vaidy leaned back in his
chair. “Think of a credit card as a sharp knife. In skilled hands it’s useful,
but careless handling can be dangerous. Let’s look at both sides.”
He continued, “First, the good
part. Credit cards make life convenient - no bulky cash, smooth online
payments, and you get reward points or cashbacks. More importantly, using it
responsibly builds your credit score, and that will matter when you want a
housing loan or car loan later. Many cards also offer purchase protection, so
there’s security when something goes wrong with a purchase.”
“That sounds perfect,” Sharan
said.
“It does until you look at the
shadow side,” Vaidy cautioned. “Credit cards carry high interest rates. If you
don’t repay the full amount every month, the interest snowballs. And people
fall into the minimum-payment trap without realising it. Add to that late fees,
annual charges, and foreign transaction costs. Worst of all, swiping a card
feels painless, so overspending becomes easy. Many youngsters get trapped
before they even realise it.”
There was silence on the call
for a moment. “So how do I use it correctly?” Sharan finally asked.
“Simple rules,” Vaidy replied.
“Choose a card that suits your spending pattern, not what the bank pushes.
Track every swipe and pay the full bill every single month. Never rely on
minimum payment. And whenever you feel like buying something impulsively, pause
and ask whether it fits your budget and goals. A credit card must work for you,
not control you.”
“That makes complete sense,
sir,” Sharan said with relief.
Vaidy smiled. “Remember, a
credit card isn’t emergency money. It’s a tool to complement financial
discipline. If you respect it, it’ll reward you. If you take it lightly, it can
drain you.”
As the call ended, Rohan
grinned. “Chita, I think you just saved another youngster from the debt trap.”
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