It’s perplexing how a tiny piece of plastic can drive young, educated people to suicide.
In his highly acclaimed documentary Maxed Out, director James Scurlock interviewed two mothers who lost their children to credit cards. Faced with insurmountable bills that compounded by the day, their two teenage kids chose to end their lives instead of facing up to the daily harassments of the issuing banks.
The same went with Sean O’Donnell from the University of Oklahoma. Despite earning just $5.15 an hour, the college student had 12 credit cards on him when he was found dead with self-inflicted injuries. How he got his hands on credit cards despite the paltry wages in anyone’s guess. But the banks carried on calling his home a year after his death to demand payments on the money he owed.
But westerners are not the only ones who fall victim to predatory lending practices. The Credit Card Conundrum is slowly tightening its noose around the necks of young Asians who are increasingly finding the need to live up to the expectations of a middle class lifestyle.
Today, counsellors in South Korea are reporting an increase in the number of youth who commit suicide over debt. This is hardly surprising coming from a nation where the average working adult carries about 4 credit cards. Last year, the nation again set a new record in credit card spending – US$272 billion, about 15% of the country’s GDP. Last month a nurse at the Chang Gung Memorial Hospital in Taiwan died by draining her own blood. She too turned to death as the ultimate solution for her ballooning credit card bill. The island she lives on is estimated to have another 700,000 credit card “slaves” – users who pay the minimum on their bills every month.
Financial delinquency is spreading like cancer in every society. Georgetown University Sociologist Robert Manning estimates that credit cards have now taken over alcohol and sexually transmitted diseases as the most major threat to the lives of young people around the world. If you live in a developed nation, chances are you will know at least one family torn apart by the malice of credit cards or unbridled debt. By all indications, the morass is slated to become a bigger problem in the future judging from the way our youngsters are handling their money today.
At this point, one may be tempted to attribute the popular culture for needlessly promoting extravagant lifestyles and hedonistic spending habits. Or perhaps the real culprit could be the banks who openly prostitute their credit cards and facilities to youngsters, students and a whole bevy of individuals who can seldom handle credit responsibly.
But playing the blame game yields no result. Materialism has taken over as the world’s major religion and banks are happily profiting from this anomalous phenomenon.
Somehow our youth no longer see the honour in remaining debt free. It is more important to have that shiny new car or to hold that fancy wedding than to remain financially solvent.
It is something that we cannot change. Once someone decides on making that big ticket purchase despite not having earned the money, it is usually very hard to change their minds. Visions of grandeur can permanently cloud the mind.
We can’t change the laws either. Lobbying the Government for stricter credit controls may produce glimpses of results every now and then. But giving credit is largely a business decision by the banks and lending institutions. Governments should not be expected to interfere in legitimate business practices, especially so if they bear bountiful opportunities for tax revenue.
What we can do however is lies in education and discourse.
I feel that it’s important for a select group in every community to continuously discuss and raise awareness in financial issues. This is especially so when our society has decided to abandon the noble money practices of our forefathers for opulence and mindless extravagance. Look around you today and you will see our youngsters spending with little regards for the future. Someday their bills will come and ultimately society will have to pay for it.
That is my reason for starting our small circle on the JustJihad.com Community Forum. It is a small collection of articles that I have written personally for my circle of friends who are concerned about their financial well being and their investments. There are only a couple of articles there right now and more will be added in progressively. Feedback from all is very much welcomed and I am also continually looking to learn more from everyone as I add on more writings and discussions.
As an opening to the section on debt, I have written the 10 Credit Card Commandments, a guide which I believe will help you beat the banks at their own game at let you come out the winner regardless of how many credit cards you own. Do check it out.
Tuesday, June 10, 2008
Monday, April 28, 2008
Is Interest Really Forbidden In Islam?
The topic has often been taken for granted. Muslims have been taught from young that interest is sinful and should be absolutely avoided. But the fact of the matter is the topic of interest in Islam has been debated by Muslims and Muslim scholars alike for the past 1400 years.
This is an investment club for Muslims by Muslims. Therefore, before any discourse can be taken with regards to investments, the issue of interest in the context of Islam will have to be scrutinized. This is so that we have a more objective view of the different investment instruments that will be at your disposal.
An understanding of this matter in various Islamic perspectives is crucial because interest, as how it is interpreted by the majority of Muslims, involve a wide-spectrum of the different financial instruments that may be part of your overall strategy. These could include fixed deposits, bonds and various other high-yielding savings accounts.
For the majority of Muslims, the issue of whether interest is acceptable in Islam has long been ingrained since time immemorial. This ruling is derived from the following verses in the Quran:
“Those who devour usury will not stand except as stands one whom the devil by his touch has driven to madness. That is because they say: Trade is like usury: but Allah has permitted trade and forbidden usury.... Allah will deprive usury of all blessing, but will give increase for deeds of charity, for He loves not any ungrateful sinner.... O you, who believe, fear Allah and give up what remains of your demand for usury, if you are indeed believers. If you do it not, take notice of war from Allah and His messenger, but if you repent you shall have your capital sums; deal not unjustly, and you shall not be dealt with unjustly. And if the debtor is in difficulty, grant him time till it is easy for him to repay. But if you remit it by way of charity, that is best for you if you only knew.”
(Surah Al-Baqarah: Chapter 2 Verse 275-280)
Some Muslims believe that interest is inherently evil. They burden the poor and provide an avenue for the rich to get even richer without labour. This according to the Muslims, is clear reason enough why interest has been forbidden in Islam
However the interpretation of the verse above has been in much dispute.
Scholars and theologians alike have pointed out the fact that the verse in the Quran prohibits against the practice of usury or riba, not interest.
The explanation given is that usury, in the context of the time of the Prophet, refers to the pre-Islamic Arabian and Jewish tradition of doubling the amount of debt that a person owes. This amount will keep on doubling every time the borrower misses a payment. This system of debt has led to the suffering and exploitation of many, especially the poor. Those who could not afford to keep up with the obscenely compounding rates usually found themselves inducted as slaves of the lender.
This interpretation is consistent with the meaning of another verse in the Quran that prohibits interest.
“O ye who believe! Devour not usury, doubled and multiplied; but fear Allah; that ye may (really) prosper.”
(Al-Imran Chapter 3 Verse 130)
Several prominent Muslim scholars seem to agree with this interpretation. In 2002, the then Grand Mufti of Egypt Muhammad Sayyid Tantawi issued a Fatwa declaring that interests on bonds and savings accounts are permissible in Islam.
Tantawi explains that interest-based banking instruments are not necessarily evil, because they can benefit everyone involved. The availability of money in interest-bearing instruments has led to the funding of much-needed infrastructure and businesses that benefit the community as a whole. Without interest, capitalism and job-creation today would not have been a reality.
Therefore bonds and interest-bearing savings accounts should be permitted, argues Sayyid Tantawi. He is currently serving as the Grand Sheikh of Islam’s most prestigious institution, the Al-Azhar University and the Grand Imam of the Al-Azhar Mosque.
Tantawi’s fatwa provoked uproars in the more conservative bastions of Islam. The majority of scholars from the four major jurisprudences have rejected Tantawi’s reasoning as inconsistent with the teachings of the Quran and seek for it to be revoked.
Those who staunchly oppose interest often use the following as their main points of argument:
1. That usury and interest are nothing more than just semantics in the English language. The Arabic language, the mother tongue of the Quran, makes no differentiation between usury and interest.
2. Interest is evil and unfair as it rests the burden of risk solely on the borrower. This opens the way for sloth, exploitation and benefit without labour on the part of the lender. They argue that Islam emphasises on diligent work instead of benefiting passively.
3. The sub-prime crisis and predatory lending practices of the west has brought about much problem and misery. This phenomenon of western families going bankrupt is often compared to the practise of debt slavery that existed in the past. This is often used as evidence that interest brings about the undesirable effects that Islam is trying to avoid.
Meanwhile, scholars who believe in interest as a legitimate instrument has brought forward the following points:
1. Muslim scholars have seldom addressed the issue of inflation. As I write this today, oil prices are rising and inflation stands at record highs. Depositors who insist on not taking any interest on their savings are slowly finding their money eroding away due to inflation every year.
2. The monetary system at the time of the Prophet is distinctly different from the fiat based paper money that we have today. In the past, money was often made of minerals or precious metal. Monetary value was often the value of the commodity being used as the money itself. Fiat money on the other hand, is paper that is not backed by an equivalent amount of gold or metal. This means money can be printed to the whims and fancies of governments’ worldwide, giving rise to high inflationary pressures that could not have existed in the olden days.
3. Islamic banking is still inviting much controversy. Critics have pointed out the fact that most Islamic banks are still holding many of its assets in conventional interest-bearing instruments instead of the “Islamic” alternatives that they have been promoting.
4. The Prophet himself may have paid interest on a loan that he made. In the Sahih Al-Bukhari, Volume 3, Book 43 (The Book of Loans), Hadith Number 2394. It is narrated by Jabir bin Abdullah that it has been recorded that the Prophet repaid his debt that he owed Jabir plus he gave him "an extra amount".
In conclusion, the issue of whether interest is acceptable in Islam will perhaps never be agreed upon in the near future. What is important is that you as an investor should fully comprehend both sides of the argument before executing your money decisions.
This is an investment club for Muslims by Muslims. Therefore, before any discourse can be taken with regards to investments, the issue of interest in the context of Islam will have to be scrutinized. This is so that we have a more objective view of the different investment instruments that will be at your disposal.
An understanding of this matter in various Islamic perspectives is crucial because interest, as how it is interpreted by the majority of Muslims, involve a wide-spectrum of the different financial instruments that may be part of your overall strategy. These could include fixed deposits, bonds and various other high-yielding savings accounts.
For the majority of Muslims, the issue of whether interest is acceptable in Islam has long been ingrained since time immemorial. This ruling is derived from the following verses in the Quran:
“Those who devour usury will not stand except as stands one whom the devil by his touch has driven to madness. That is because they say: Trade is like usury: but Allah has permitted trade and forbidden usury.... Allah will deprive usury of all blessing, but will give increase for deeds of charity, for He loves not any ungrateful sinner.... O you, who believe, fear Allah and give up what remains of your demand for usury, if you are indeed believers. If you do it not, take notice of war from Allah and His messenger, but if you repent you shall have your capital sums; deal not unjustly, and you shall not be dealt with unjustly. And if the debtor is in difficulty, grant him time till it is easy for him to repay. But if you remit it by way of charity, that is best for you if you only knew.”
(Surah Al-Baqarah: Chapter 2 Verse 275-280)
Some Muslims believe that interest is inherently evil. They burden the poor and provide an avenue for the rich to get even richer without labour. This according to the Muslims, is clear reason enough why interest has been forbidden in Islam
However the interpretation of the verse above has been in much dispute.
Scholars and theologians alike have pointed out the fact that the verse in the Quran prohibits against the practice of usury or riba, not interest.
The explanation given is that usury, in the context of the time of the Prophet, refers to the pre-Islamic Arabian and Jewish tradition of doubling the amount of debt that a person owes. This amount will keep on doubling every time the borrower misses a payment. This system of debt has led to the suffering and exploitation of many, especially the poor. Those who could not afford to keep up with the obscenely compounding rates usually found themselves inducted as slaves of the lender.
This interpretation is consistent with the meaning of another verse in the Quran that prohibits interest.
“O ye who believe! Devour not usury, doubled and multiplied; but fear Allah; that ye may (really) prosper.”
(Al-Imran Chapter 3 Verse 130)
Several prominent Muslim scholars seem to agree with this interpretation. In 2002, the then Grand Mufti of Egypt Muhammad Sayyid Tantawi issued a Fatwa declaring that interests on bonds and savings accounts are permissible in Islam.
Tantawi explains that interest-based banking instruments are not necessarily evil, because they can benefit everyone involved. The availability of money in interest-bearing instruments has led to the funding of much-needed infrastructure and businesses that benefit the community as a whole. Without interest, capitalism and job-creation today would not have been a reality.
Therefore bonds and interest-bearing savings accounts should be permitted, argues Sayyid Tantawi. He is currently serving as the Grand Sheikh of Islam’s most prestigious institution, the Al-Azhar University and the Grand Imam of the Al-Azhar Mosque.
Tantawi’s fatwa provoked uproars in the more conservative bastions of Islam. The majority of scholars from the four major jurisprudences have rejected Tantawi’s reasoning as inconsistent with the teachings of the Quran and seek for it to be revoked.
Those who staunchly oppose interest often use the following as their main points of argument:
1. That usury and interest are nothing more than just semantics in the English language. The Arabic language, the mother tongue of the Quran, makes no differentiation between usury and interest.
2. Interest is evil and unfair as it rests the burden of risk solely on the borrower. This opens the way for sloth, exploitation and benefit without labour on the part of the lender. They argue that Islam emphasises on diligent work instead of benefiting passively.
3. The sub-prime crisis and predatory lending practices of the west has brought about much problem and misery. This phenomenon of western families going bankrupt is often compared to the practise of debt slavery that existed in the past. This is often used as evidence that interest brings about the undesirable effects that Islam is trying to avoid.
Meanwhile, scholars who believe in interest as a legitimate instrument has brought forward the following points:
1. Muslim scholars have seldom addressed the issue of inflation. As I write this today, oil prices are rising and inflation stands at record highs. Depositors who insist on not taking any interest on their savings are slowly finding their money eroding away due to inflation every year.
2. The monetary system at the time of the Prophet is distinctly different from the fiat based paper money that we have today. In the past, money was often made of minerals or precious metal. Monetary value was often the value of the commodity being used as the money itself. Fiat money on the other hand, is paper that is not backed by an equivalent amount of gold or metal. This means money can be printed to the whims and fancies of governments’ worldwide, giving rise to high inflationary pressures that could not have existed in the olden days.
3. Islamic banking is still inviting much controversy. Critics have pointed out the fact that most Islamic banks are still holding many of its assets in conventional interest-bearing instruments instead of the “Islamic” alternatives that they have been promoting.
4. The Prophet himself may have paid interest on a loan that he made. In the Sahih Al-Bukhari, Volume 3, Book 43 (The Book of Loans), Hadith Number 2394. It is narrated by Jabir bin Abdullah that it has been recorded that the Prophet repaid his debt that he owed Jabir plus he gave him "an extra amount".
In conclusion, the issue of whether interest is acceptable in Islam will perhaps never be agreed upon in the near future. What is important is that you as an investor should fully comprehend both sides of the argument before executing your money decisions.
Tuesday, April 15, 2008
10 Credit Card Commandments
Of all the items in your wallet, none other is smeared in as much negative stereotype as the credit card. The moment you whip the shiny plastic out, people automatically assume that you’re in debt.
But the reality is, not everyone sporting a credit card is rolling on borrowed money. With a little financial sophistication and suaveness, your credit card could be the key to bountiful savings, exclusive privileges and lots of free stuffs that cash payers will never get to enjoy – all hesitantly paid for by the bank and at zero cost to you. Zilch!
But be warned, to enjoy all these without getting burnt is no walk in the park. Your credit card company and banks will try their best to make money out of you through high interest rates and all kinds of hidden fees. Avoiding them while still being able to claim free stuff out of the banks is an art only a selected few have mastered.
Follow the 10 Credit Card Commandments carefully and you will beat them at their own game.
The 10 Credit Card Commandments
Credit Card Commandment 1: Your Bank is Evil until Proven Otherwise
Remember, your bank has interests that do not run parallel with yours. You, as a credit card user, will try your best not to incur any charges. Banks, on the other hand, will try to milk you out of every penny they can lay their hands upon. While applying for my very first credit card, the officer even tried to obtain my signature for loans that I do not need by asking me to sign on unexplained slips and forms. Their deception knows no end. Needless to say, I walked away.
Be vigilant at all times during the credit card application. Be wary of “special offers” or any other credit facilities that you do not need. They usually come with some kind of fees or interest charges.
Credit Card Commandment 2: Read the Card Agreement like a Novel
As always, the devil will be in the details. Be sure to familiarise yourself with the interest-free grace periods, important due dates and any other clauses that may work against you in the future. They could be hidden in an obscure part of the agreement.
If you see anything that you are not comfortable with, make it known with your feet and walk. The credit card industry is a competitive one and you are bound to find a better deal somewhere else.
Credit Card Commandment 3: Never, Ever Withdraw Cash from an ATM, Ever
Your credit card can be used to withdraw cash at supporting ATMs. But not many realise that withdrawals using this method will incur interest charges and fees that will make your local loan shark look like Mother Theresa.
Remember, cash advances made using a credit card do not have an interest-free grace period. This means you will be charged compound interest on a DAILY basis immediately upon getting the cash. Unless it is a matter of life and death, never, ever withdraw cash from the ATM using your credit card.
Credit Card Commandment 4: Back Every Purchase with Available Cash
During the credit card application, the bank will try to sell you a very costly credit insurance policy. It is a scheme that is meant to allow the bank to recover payment in case you get into an accident, lose your job or are simply incapacitated to pay.
People who buy credit insurance sometimes give hundreds of free dollars to the bank in their purchases by paying this premium. I say screw this expensive insurance and back your purchases with cash instead.
Ensure that every purchase you make is supported by an equivalent amount of cash that you have in the bank. In this way, if something does happen, you can arrange for the bank to deduct the amount due from your deposit. You will only pay for what you purchased instead of paying for something that may never happen.
Credit Card Commandment 5: Never Let the Sun Set Upon a Debt
There is a group of credit card users who will purchase items using a credit cards, and then immediately proceed to the nearest electronic kiosk to make payment for them in cash. In banking circles people like these are known as the deadbeats. They use the credit card solely as a method of payment to collect discounts and reward points.
Deadbeats annoy the hell out of banks. This is because they may actually be losing money on these credit card accounts. Having to maintain these accounts and pay for their rewards while at the same time not being able to make a single cent of interest revenue frustrates them a lot.
Be a deadbeat. Never let the sun set upon an outstanding credit card payment. Life is good when you can go to bed without debt. It cannot be over-emphasized; treat the credit card as a method of payment, not a line of credit.
Credit Card Commandment 6: Near Your Credit Limit Not
It is a requirement by law for your bank to inform the local Credit Bureau should you become delinquent in your credit card payments. On top of that, these systems will also flag potentially delinquent accounts to prevent these high-risk individuals from taking on additional facilities of credit.
Try not to go within 90% of your credit limit to prevent these unnecessary flags. You never know how a good credit score might help you in the future.
Credit Card Commandment 7: Avoid Instalments like a Plague
Lately, 0% instalment plans are becoming a very popular arrangement between merchants and banks. Banks love you when you go on these instalment schemes. This is because people paying on instalments are not eligible for their rewards points and are more likely to become delinquent – giving them the chance to charge hefty interests and late fees.
Try to purchase something only after you have earned the money. Don’t spend on something you have not yet worked for.
Credit Card Commandment 8: Get Online
In order to counter deadbeats and people who pay their bills on time, some banks are shifting the goal posts by changing the payment due date for some accounts. By employing this tactic, an increasing number of consumers are caught unaware, thus missing their payment deadlines and incurring those dreaded late fees and interest charges. This technique has proven to be quite profitable for the banks indeed. Best of all for them, the method is completely legal.
Another good reason to get online is to spot unauthorised transactions the moment they occur. While in London, a dishonest cabby billed me twice for the same trip. I spotted the discrepancy the moment it showed up and it gave me ample time to make rectifications.
Utilise Internet banking to monitor your credit card transactions. It’s always best to know your money movement in real time when you’re holding on to a credit card. Your reaction time will be much faster in case the unforeseen happens.
Credit Card Commandment 9: Reward Yourself, Not the Bank
You’ve done your spending and you’ve paid your bills. So comes the time to collect your big bag of reward points. You will be looking at some nifty free stuff like book vouchers, appliances, restaurant treats and many more.
But be sure to just reward yourself and not the bank. Topping up of these vouchers can only be done using the issuing bank’s credit card so be sure to try and redeem the voucher without the need to pay anything. It amazes me how some consumers redeem a $10 restaurant voucher but end up raking $300 in credit card bills as their “reward”.
Credit Card Commandment 10: Nobody Pays Annual Fees
It’s supposed to be an open secret but credit card companies will waive the annual fees once you threaten to cancel your card. Your credit card account is a potential source of revenue for them so they would somehow want to keep it alive, no matter how much it is costing them in rewards points at the moment.
Don’t pay annual fees. The moment this appears on your credit card bill, kindly give your friendly customer service officer a call and ask for it to be waived. If they refuse, just tell them you would like your card cancelled and you will be pleasantly surprised by their sudden change of tone.
But the reality is, not everyone sporting a credit card is rolling on borrowed money. With a little financial sophistication and suaveness, your credit card could be the key to bountiful savings, exclusive privileges and lots of free stuffs that cash payers will never get to enjoy – all hesitantly paid for by the bank and at zero cost to you. Zilch!
But be warned, to enjoy all these without getting burnt is no walk in the park. Your credit card company and banks will try their best to make money out of you through high interest rates and all kinds of hidden fees. Avoiding them while still being able to claim free stuff out of the banks is an art only a selected few have mastered.
Follow the 10 Credit Card Commandments carefully and you will beat them at their own game.
The 10 Credit Card Commandments
Credit Card Commandment 1: Your Bank is Evil until Proven Otherwise
Remember, your bank has interests that do not run parallel with yours. You, as a credit card user, will try your best not to incur any charges. Banks, on the other hand, will try to milk you out of every penny they can lay their hands upon. While applying for my very first credit card, the officer even tried to obtain my signature for loans that I do not need by asking me to sign on unexplained slips and forms. Their deception knows no end. Needless to say, I walked away.
Be vigilant at all times during the credit card application. Be wary of “special offers” or any other credit facilities that you do not need. They usually come with some kind of fees or interest charges.
Credit Card Commandment 2: Read the Card Agreement like a Novel
As always, the devil will be in the details. Be sure to familiarise yourself with the interest-free grace periods, important due dates and any other clauses that may work against you in the future. They could be hidden in an obscure part of the agreement.
If you see anything that you are not comfortable with, make it known with your feet and walk. The credit card industry is a competitive one and you are bound to find a better deal somewhere else.
Credit Card Commandment 3: Never, Ever Withdraw Cash from an ATM, Ever
Your credit card can be used to withdraw cash at supporting ATMs. But not many realise that withdrawals using this method will incur interest charges and fees that will make your local loan shark look like Mother Theresa.
Remember, cash advances made using a credit card do not have an interest-free grace period. This means you will be charged compound interest on a DAILY basis immediately upon getting the cash. Unless it is a matter of life and death, never, ever withdraw cash from the ATM using your credit card.
Credit Card Commandment 4: Back Every Purchase with Available Cash
During the credit card application, the bank will try to sell you a very costly credit insurance policy. It is a scheme that is meant to allow the bank to recover payment in case you get into an accident, lose your job or are simply incapacitated to pay.
People who buy credit insurance sometimes give hundreds of free dollars to the bank in their purchases by paying this premium. I say screw this expensive insurance and back your purchases with cash instead.
Ensure that every purchase you make is supported by an equivalent amount of cash that you have in the bank. In this way, if something does happen, you can arrange for the bank to deduct the amount due from your deposit. You will only pay for what you purchased instead of paying for something that may never happen.
Credit Card Commandment 5: Never Let the Sun Set Upon a Debt
There is a group of credit card users who will purchase items using a credit cards, and then immediately proceed to the nearest electronic kiosk to make payment for them in cash. In banking circles people like these are known as the deadbeats. They use the credit card solely as a method of payment to collect discounts and reward points.
Deadbeats annoy the hell out of banks. This is because they may actually be losing money on these credit card accounts. Having to maintain these accounts and pay for their rewards while at the same time not being able to make a single cent of interest revenue frustrates them a lot.
Be a deadbeat. Never let the sun set upon an outstanding credit card payment. Life is good when you can go to bed without debt. It cannot be over-emphasized; treat the credit card as a method of payment, not a line of credit.
Credit Card Commandment 6: Near Your Credit Limit Not
It is a requirement by law for your bank to inform the local Credit Bureau should you become delinquent in your credit card payments. On top of that, these systems will also flag potentially delinquent accounts to prevent these high-risk individuals from taking on additional facilities of credit.
Try not to go within 90% of your credit limit to prevent these unnecessary flags. You never know how a good credit score might help you in the future.
Credit Card Commandment 7: Avoid Instalments like a Plague
Lately, 0% instalment plans are becoming a very popular arrangement between merchants and banks. Banks love you when you go on these instalment schemes. This is because people paying on instalments are not eligible for their rewards points and are more likely to become delinquent – giving them the chance to charge hefty interests and late fees.
Try to purchase something only after you have earned the money. Don’t spend on something you have not yet worked for.
Credit Card Commandment 8: Get Online
In order to counter deadbeats and people who pay their bills on time, some banks are shifting the goal posts by changing the payment due date for some accounts. By employing this tactic, an increasing number of consumers are caught unaware, thus missing their payment deadlines and incurring those dreaded late fees and interest charges. This technique has proven to be quite profitable for the banks indeed. Best of all for them, the method is completely legal.
Another good reason to get online is to spot unauthorised transactions the moment they occur. While in London, a dishonest cabby billed me twice for the same trip. I spotted the discrepancy the moment it showed up and it gave me ample time to make rectifications.
Utilise Internet banking to monitor your credit card transactions. It’s always best to know your money movement in real time when you’re holding on to a credit card. Your reaction time will be much faster in case the unforeseen happens.
Credit Card Commandment 9: Reward Yourself, Not the Bank
You’ve done your spending and you’ve paid your bills. So comes the time to collect your big bag of reward points. You will be looking at some nifty free stuff like book vouchers, appliances, restaurant treats and many more.
But be sure to just reward yourself and not the bank. Topping up of these vouchers can only be done using the issuing bank’s credit card so be sure to try and redeem the voucher without the need to pay anything. It amazes me how some consumers redeem a $10 restaurant voucher but end up raking $300 in credit card bills as their “reward”.
Credit Card Commandment 10: Nobody Pays Annual Fees
It’s supposed to be an open secret but credit card companies will waive the annual fees once you threaten to cancel your card. Your credit card account is a potential source of revenue for them so they would somehow want to keep it alive, no matter how much it is costing them in rewards points at the moment.
Don’t pay annual fees. The moment this appears on your credit card bill, kindly give your friendly customer service officer a call and ask for it to be waived. If they refuse, just tell them you would like your card cancelled and you will be pleasantly surprised by their sudden change of tone.
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