credit credit ..

Today my friend showed me a news article on a new flying coat released in New Zealand. Just for 100,000 USD, you can fly to your work everyday, escaping all the traffic. Instinctively I wondered if they sell it on credit. Imagine holding your girl friend with your left hand, punching up your right fist into the air and flying right into the air (well, after somehow managing to switch the coat on). The fact that you have a credit card bill stops you and your dreams from reaching high into the skies?? :). May be yes, atleast in this part of the world I am in.

When I opened my first Swiss bank account in January, they asked me if I wanted a credit card. "Sure", I said very positively. "OK, based on your salary, you are eligible for a credit limit of 4000 CHF. We will freeze that amount in your savings account. You can not with draw that amount. And do you also want to set me up for an automatic pay so that all of the balance gets deducted from the savings at the end of the month?". Confused, I said, "hold on. I did not even follow your first sentence. You give a credit card and freeze all the money in the limit? That makes the available balance less than in using a debit card." "That,s how credit card works, Sir".
Having stayed in the US for 6 years, I considered myself a self appointed authority on credit and wanted to enlighten him. I could not do it for want of time. I hope this blog reaches him.


When I went to the US 7 years ago, I did not have a credit card. I did not even find a need for it. Slowly as I find out how cheap it was to make purchases online, on amazon and other places, I realized I need a credit card. The only bank that was ready to offer it to me was the university bank with a 1000 USD limit. I used to use it for online purchases - books, phone cards, flight tickets .. and used to pay all the amount due at the end of the month. As more months passed by, I was too lazy to carry money all the time. And especially US was not a safe place to carry bigger denominations in your pocket. So, started using the card for purchases in supermarket. As I used to pay off the bills completely and regularly, it become a convenience card. I used to walk out of my house without a single dollar in a pocket for months together. As I used the card more, I started receiving letters from the bank saying they increased my credit limit. They started believing me. Other banks also started sending me offer letters for new credit cards. In less than 3 years of my stay in the US, I had 8 credit cards, with a total limit of about 25000 to 30000 USD. Nice. Now the problem was to safe guard the cards. Because losing them, I lose tens of thousands. So, most of them remained home.

In the last 3-4 months of my stay in the US, I was not sure of when I was leaving the country and to where. Without having any idea that I would be finishing my degree and going out of salary in 2 months, I froze my money in somekinds of investments. I had the last month to live on, the previous months bills to pay, and on top of these there were moving expenses, purchase of laptop. America, I finally decide to use the lessons I learnt. I applied for a new credit with 10,000 USD limit and no interest for one complete year. Used it fully for all the expenses above and still had some usable limit. That was the time I was prowling to see what all I can buy using a credit card. In fact, I thought I would buy the Taj Mahal if they sold it on credit. Some one asked me "why would you want to buy it?", "Why not if its available on credit?" I asked in return. The question is not about need, its about the availability of the object on credit. One of my friends was ready to sell it to me for 2,300 USD, but he said he only accepts cash. Too bad I had to pass on a genuinely good offer.

In India, the concept of credit has started lately. Since the chance of default is very likely, the rate of interest can go upto 50% a year ??? And since it's still a society where everyone is worried about what the neighbor thinks of them, these bankers do not mind making a big fuss outside your home or even seizing the object bought on credit if the timely payments are defaulted.

Coming back to the main story, I moved to Switzerland and finished up the limit on the card in a few days with the furniture I bought. That solved one problem, began many others. While I was waiting for my first salary, I was in a bad condition financially and the banks in the US in a worse condition to offer me a new credit card. So, I had to change my ways. Anyways, slowly life changed a little day after day with me starting to use the debit card for a few months. And now like most of the Swiss, I take a bagful of coins and a pocket full of bank notes to pay everything. .. That's a big change. Whether I want credit or not is different, but will still not mind arguing with the banker on the definition of credit...