Last evening I was having a chat with a person I know who is having some financial difficulties. There has been a medical situation at their home and the expenses have been soaring. It's kind of a helpless situation. Now the question is where to get this additional money from which is needed to meet the medical expense. The family has been trying out with different sources, reaching out to charities, taking help from family and friends but still cannot meet up with the expenses 100%.
My friend is planning to start using her credit card for the additional expense. She wanted my advice. My advice to her was not to use, because this is one thing that can really land you in trouble going ahead if she is not able to pay the bills. As it is she does not have enough sources, so where is she going to pay the bill from and then the interest on credit card is very high, which will keep mounting her bill and over a period of time it can be a huge amount that she will be liable to pay. So I do not feel it is a very wise decision to use the credit card when you are not certain about how you are going to pay it.
My personal take is that credit card should only be used when you have money to pay the bill on the billing cycle else their interest rates are too high and if you default payment for a couple of months also then you will end up paying too much more of the amount then you actually spend. Credit card should only be used after making provision of the payment amount. I use it to earn some extra interest on my savings account and to accumulate points which I can use to buy somethings. I buy almost everything on credit card so that I can accumulate points and if you spend some X amount then you also get bonus points. Like wise last time I accumulated that much points with which I could buy a laptop.
All these services are good if we use it in the right manner. We can make them work for us and gain some benefits, but we need to be careful with using them and understand their negative impacts also.
For my friend I did not advice that she should use, because as it is she is in financial trouble and if she uses the card and is not able to pay the amount then the interest will build up and eventually it will become a very stressful situation for her if she is not able to pay. The banks also get brutal then in such situations and they can worry you like hell. They will be after your life to recover the money. The fact is that borrowing money from anywhere is stressful, but bank money if you are not able to repay then they can get after your life. It is very easy to get swayed away with these options, but we need to think very wisely before using them.
It's sad that she is stuck up in a very tough situation of life right now, but she will have to think on some better solutions then this one.
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