The story of a credit card holder whose credit debt increased from 8.5 million VND to more than 8.8 billion VND after 11 years is "hot" on mass media and social networks, attracting millions of people's attention recently. Up to now, the bank has confirmed that it will not collect this 8.8 billion VND debt from the cardholder. However, the story raises the issue of using and managing credit cards for the cardholder so that the credit card can function as a convenient and civilized form of payment.
Consumers need financial knowledge when using credit cards - Photo: TU LINH
The specific incident is that Mr. PHA in Quang Ninh has just received a notice from the bank demanding a debt of 8.8 billion VND after 11 years. The bank said that he opened a Master Card at Eximbank Quang Ninh branch on March 23, 2013 with a limit of 10 million VND.
Then there were two payment transactions at a card acceptance point. However, the bank said that because Mr. PHA did not pay the loan, after 11 years the debt including interest and penalty fees... had increased to a huge number. The incident is a warning bell for everyone, especially for those who use credit cards but do not yet fully understand the nature of this type of card.
The above story made Ms. Truong Thi B. in Dong Ha City suddenly remember that she opened a credit card at a local bank during a trip abroad 6 years ago. When abroad, she was able to shop and pay by credit card very conveniently without having to exchange the local currency.
After returning home, Ms. B. deposited the money back into the card. Since then, she has not used the card and has not requested to close the card at the bank, so she does not know if any debt has arisen, so Ms. B. is quite worried. Fortunately, when she went to the bank to request to close the card, she was told that she did not have any outstanding balance on the credit card, so the card closure was quickly resolved.
Up to now, users have acknowledged that credit cards have many benefits. First of all, credit cards are a more convenient and safer means of payment than cash. Opening a credit card means that the cardholder is given an amount of money by the bank depending on his or her creditworthiness, about 3 or 4 times the cardholder's monthly salary.
Cardholders can purchase goods in advance and pay the bank later; conveniently shop domestically and internationally; shop directly or online and can receive many preferential programs when shopping and especially financial solutions in case of urgent need of money.
In essence, the amount of money provided in a credit card is a bank loan under special unsecured conditions, with interest rates many times higher than normal mortgage loans, accompanied by late payment penalties and very high interest in case the cardholder fails to fulfill the obligation to pay the outstanding balance in full and on time to the bank (within 45-50 days depending on the bank's regulations).
However, many people do not understand the nature of this type of payment card. When there is a large amount of money in the card, many people easily have illusions about their financial capacity, so they spend and shop beyond their ability to pay.
If the cardholder does not fully repay the “loan” used, the very high interest rate will lead to compound interest, causing the cardholder to lose the ability to pay and face trouble. In addition, during the use process, many people do not pay attention to fees such as: annual credit card fees, credit card cash withdrawal fees, credit limit fees, credit card foreign currency conversion fees... as well as the interest rate of the card, so by the day of paying off the credit balance, a large additional financial expense has arisen.
According to banking experts, to avoid losing money when using credit cards, users need to note: when not paying the entire balance on time, not paying the minimum balance on time, or paying the minimum balance on time but not paying the entire balance on the statement on time... the bank will charge credit interest.
Cardholders should not give their cards to others to pay for services without their presence. In addition, they should not access strange, unofficial links to enter card information during the payment process. Do not disclose credit card information under any circumstances. Do not use credit cards to withdraw cash because the main function of credit cards is to make payments, not to withdraw cash.
Therefore, when using a credit card to withdraw cash, the cardholder may have to pay a fairly high withdrawal fee. You should not use the card if your monthly income cannot pay at least 30% of the credit card limit.
And finally, you should not open many credit cards because it will cause the cardholder to overspend and be difficult to control. In case you want to close the card, pay off the outstanding balance and notify the issuer. Do not stop using the card on your own if there is still an unpaid balance on the card, you will have an overdue debt and be charged high interest rates.
Therefore, to maximize the value and benefits of a credit card, you should choose a card that suits your needs, pay your credit balance on time, register for automatic payment on your credit card, always check your credit limit, register for SMS notification service, limit shopping when the statement date is near... to avoid unintentional mistakes that make you a "credit debtor".
Tu Linh
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