Another Credit Card Tutorial by GenX @ http://www.GenXGenYGenZ.com
I have mentioned in CC 101 that 0% Installment Plans termed as Easy Payment Plan (EPP) or Installment Payment Plan (IPP) are well laid traps by banks to entice credit cardholders to spend beyond their means. You may ask, how can that be? Isn’t 0% Interest Good for us? The answer is Yes and No.
IF you have the cash in hand, then YES, 0% Installment Plans are great as it can earn us some pocket money as we can use the money in hand to go deposit into Fixed Deposit and earn interest.
IF you don’t have the cash in hand (savings) prior to signing up for a 0% Installment Plan, then the answer is NO. This is because you are spending beyond your means. And if you only pay the minimum payment due every month, don’t even consider using your credit card until your debt is fully settled.
The banks knows that many people who own credit cards have no discipline in controlling their spending.
In order to entice cardholders to spend more on materialistic stuff which are not required for survival, the banks offer 0% interest free plans. Yeah, the banks in Malaysia are really freaking generous.
So card users will happily swipe their credit cards for this and that using 0% Installment Plans as who can resist such a wonderful offer to experience a short burst of temporary happiness. What these people don’t realize is that every time they utilize the 0% Installment Plan on materialistic stuff, they are incurring more debts which means that they will have less money in the future to save (e.g. children education fund, retirement, etc) or spend on necessary expenses (as their disposable income has been reduced until the debt is paid).
In addition to having less disposable income in the future, if these people fail to pay the Statement Balance in full prior to the Payment Date, the banks then get to impose interest on the Outstanding Balance (including the portion that is supposed to be 0% Interest!!).
Seriously, if you have no money (savings in the bank) today to pay for a specific item you want to purchase, but still purchase that item with 0% Installment Plan, what makes you think you will have money tomorrow to pay for stuff that is really essential?
0% INSTALLMENT PLAN IS A TRAP TO ENTICE YOU INTO THE SHIT HOLE OF DEBT
I shall now give you two examples as to how 0% Installment Plan Is A Trap laid out by credit cards issuers to make you fall into the shit hole of debt.