There is a new trend that’s developing in the country: the use of credit cards to make financial transactions. Many banks have introduced credit cards and most Ugandans are quickly embracing this new, trendy and fast growing way of transacting business.
Last month, a friend lamented of how he had racked up $140 (about Shs450,000) in Facebook ads and now Facebook had blocked his ad manager account until he clears. So he owes Facebook about UGX450,000, which meant he had a debt of $140 to pay.
So what is a credit card?
A credit card is a plastic card that enables you to buy and pay for goods and services without using cash. When you use a credit card, what actually happens is you use your bank’s money to pay for your goods or services then your bank debits your account.
Actually, a credit card is an account (bank account) and when you have no money on your account the bank will pay literally loaning you money which you’re supposed to pay back.
Like any loan, this money comes with an interest and charges for late payment. Many people have different opinions in regards to the credit card. Some think its evil some think it’s convenient and from whatever point you look at it from its all down to how you use your card and your financial discipline and knowledge.
One thing for sure is that a credit card makes it easier to spend than when you have to pay in cash so if you don’t have control you can find yourself spending more than you should, whether this is a problem will depend on how you view it.
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Cash is more scarce so there is always the psychological barrier towards spending it a thing that’s not there with spending using credit card so a credit card expense of UGX100,000 can increase to UGX200,000, including interests and late payment fees if you take long to pay so it would be good to make sure you pay your credit card bills on due date.
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Remember this is actually a loan, so the bank will charge you for using other people’s money to make your financial transactions.
Credit cards are however not for everyone although the banks won’t refuse to give every one that walks to them one though in the wrong hands, they can be dangerous.
If you have personality traits like a tendency to lack self-control, if you’re in the process of repairing your finances, or if you’re not ready for personal responsibility, avoid credit cards until you are mentally and emotionally prepared. Banks will also use credit card to gauge your credit worthiness.
So try and pay in time because when you do so the banks will see you as a good customer who can manage their finances and it could be the basis of advancing other loan facilities to you in the future whereas not paying in time may jeopardize your ability to get/acquire loans in the future.
So please as you rush to bank to get yourself that credit card because you saw some else have one take off some time to think hard and honestly about your ability to manage the credit card. Would you take a loan with the confidence to be able to manage it!? I think you should look at it from that perspective.
f you’re answer is affirmative then go ahead and have yourself one otherwise you could just be acquiring the tools that’s going to drive you into the darkest pit of debt.
ABOUT AUTHOR:
Jaluum Herberts Luwizza is Business Consultant, Writer and Public Speaker with YOUNG TREPS a business management and consulting firm that helps people start, run and grow profitable and sustainable businesses.
