According to a report from Credit Counseling and Debt Management Agency of Bank Negara Malaysia or The Central Bank of Malaysia, among the cardholders below the age of 30, 50% of them are unable to settle their credit card debt and they have to declare bankruptcy. In the survey, among the delinquent cardholders, 22% cannot properly manage their personal finance and another 27% cannot control the use of their credit cards.
What can young people, especially fresh graduates, do to manage their personal finance? Here are some useful tips
• Pay in cash: You will not get into debt when you pay in cash for all your purchases. Your spending is limited by your financial resources.
• Use prepaid card or debit card issued by Visa or MasterCard: For a start young people should use a prepaid card (it is preloaded with a sum of money and you use it as a credit card until the amount stored in the card is exhausted). You can also use a debit card and it is linked to your bank account. Like a credit card, you can charge your purchases to your card up to the maximum amount of your available fund in your bank account. You will gain credit card experience this way.
• Credit card: When you are using a credit card for the first time, remember to treat it like cash. For each Ringgit, you charge to the card back it up with cash for the same amount to meet payment at the end of the month. Do not opt for a minimum payment. You will not only incur interest but at the same time, it is the route leading to unmanageable debt and eventually bankruptcy. Use the card for convenience only. Don’t buy in credit to attract interest and debt.
• Impulsive spending: Do not show off your credit card by entertaining your friends lavishly with it. Do not buy what you want but use the card to spend according to your monthly budget. In this way, you stay out of debt. Getting into debt is easy but getting out of it is very difficult. Spend only your own money but not the bank’s money. Nothing is free in this world.
You can keep your credit cards but you have to spend within your monthly earnings and treat your cards like cash in your pocket or in your bank accounts. Settle the credit card bills promptly and fully to build your creditworthiness.
Young people often have trouble acquiring credit cards. This is why they have begun turning to prepaid cards from companies like Netspend.com as a better alternative. These prepaid cards are easy to acquire, use, and reload at the users convenience. They also cut out the threat of extra charges and accrual of debt, something that everyone can appreciate.
ReplyDelete