“Buy now, pay later! Pay me when you have the money, man! Relax!” About 10 years back, one would’ve loved to hear these words from any shopkeeper. Those were the good ole days of the tab system, or in the more popular Indian parlance, the ‘khaata’. Not everyone got that privilege, mind you! You had to earn it, you had to prove your credit worthiness, you had to be a regular at the store, be known, and more importantly, be liked. The first memories that come to mind when I think about the khaata system is the movie Mr. India, and the friendly squabbles between Calendar and Roopchand. Of course, unlike Roopchand, not all grocery store guys would go wicked on you owing their loyalty to Mogambo! Well, at least not if you’ve been clearing your tab regularly.
The present day avatar of Roopchand and his khaata system are the credit cards. But, do beware - these seemingly harmless, and often delightful, creatures are pure evil. They lure you in promising the world – you know, with the all-so-familiar “Buy now, pay later! Pay us back when you have the money! Relax!” philosophy. You get roped in just like a naïve little insect heading into the Venus fly trap, unassuming and very vulnerable. You calmly walk in to their wondrous world of low interest paybacks, pay-by-EMI schemes and my personal favourite, the minimum amount due. And once you’ve been reeled in, there’s no getting out. There’s no patch that can help you kick the credit card habit, no magical gum with approved credit card nicotine levels that can help you get out!
Just think about it. How have we, and our spending habits, changed in the last 5 years:
- You drive into the petrol pump (or ‘gas station’ for the US-returned folks who don’t seem to remember what a ‘petrol pump’ is) and go – full tank, fill ‘er up! No more do you fill fuel for Rs. 500 only – that’s passé!
- You walk into an Adidas store with the huge SALE sign in the window – 40% off?!?! Shoes only for Rs. 3500? Awesome! Charge it to my card, please!
- Partying at the Blue Frog in Bombay? Holy smokes! Rs. 600 for one cocktail?!?!?!?! You gotta be kidding me!!! Okkkkk…charge it to my card!
One fine day the credit card bill arrives, and you wonder! When did I spend that much? There must be a mistake! You start going through the transaction details one by one. Rs. 4,800 at Area 51 – oh yeah! I remember that. Next – Rs. 9,500 paid towards Jet Airways? Oh yeah, Tambi’s wedding!! Did that bozo have to get married this month?!?!?! So on and so forth. And then there’s always one or two entries in there that you just can’t figure out. Right? Am sure that happens to each one of us every single month. That Rs. 3,400 at JD Electronics or something of the sort? What??? What was that? What did I buy from JD Electronics? You wrack your brains for about an hour, ask everyone possible about what this amount could be. You rummage through whatever bills you have lying in your bedside drawer. Then, you just give up! You just go back to the bill, and look at the final amount to be paid. Rs. 20,000?!?!?! Wow!!!!
Then your attention is drawn to that tiny figure mentioned against the words ‘minimum amount due’ – the easiest escape route from that 20,000 bill, you think. I can pay off Rs. 500 easily – wow! I love this new Roopchand! Frankly, I think the government should make it compulsory for credit card companies to also print 2 horns at the sides of this ‘minimum amount due’. Something like the “Smoking Kills!” signs that cigarette brands have to put on their packaging. Anyway, you go ahead and pay the minimum amount due – that measly Rs. 500. For one month, you forget about the 20k bill that you’d raked up last month, and you step into the mall again. Obviously, there’s a horde of sales on again, and again, you do waiver a little ‘cos you have the Visa Power that Sachin Tendulkar so prudently recommended.
One month down the line, the next bill comes along. Again, that evil minimum amount due figure teases you ever so slightly. “Ah! I need to buy that home theatre system this month, let me just pay the minimum amount due just this once more”, you say to yourself. The home theatre is bought, and of course, you swipe that magical credit card again. Life is sweet! The story goes on for a few months, and BAM! your bill runs up beyond recognition. You wonder how the minimum amounts that you so diligently paid every month have not managed to drop that ‘total amount due’ column even marginally. Yeah, folks! You’ve been burned! The lavish interest rates coupled with the enormously complicated calculation mechanisms of these credit card companies leaves you absolutely bewildered. But, there’s nothing that you can do besides pay the damn thugs off and move on in life! At best, you can use your “I’ve been a loyal customer to the bank for over 5 years” card to knock off some tiny finance charges. Take the whole experience as one of life’s cruel lessons and be a little wiser having been through it.
So, folks, moral of the story: Buy now, pay later does come with a “Conditions Apply” in the fine print. And you all know that whenever you’ve heard those two words, somehow and in some way they have always come back to bite you in the butt! So, beware!
2 comments:
Banks are just like any other business, they want to make sure their "interests" are protected.
Generally speaking, I am in favor of consumer spending. The more the better. What banks should do is open up to the idea of letting consumers control their spending.
If a bank gave me a clear dashboard of how much I am spending over my budget for each category of expense, and allow me to not spend more than I need to, I doubt I would spend any less. Actually I may be way more loyal to that bank to allow me to control my financial interests.
Sure, Sukh. I agree on the bit about encouraging consumer spending. But, none of the banks really do anything to control your spending! Besides, by the time you look at how much you've spent in a month, the damage is already done, isn't it?
And as far as I know on how these credit card companies work, majority of their money is made through folks who don't pay back on time, aka the minimum amount due payers!
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