IT'S great to be able to buy things on your credit card, but some people still don't realise that at some point you will have to pay the debt incurred.
It isn't funny considering how many of us don't keep that in mind when we have our cards zapped.
Credit card debt in Singapore hit an estimated $3.4 billion last December, the highest for that month in 20 years.
The more worrying bit is that, according to the Monetary Authority of Singapore, rollover balances jumped more than 13 per cent last year.
Rollover balances - the unpaid amounts that are subject to hefty interest charges - have been climbing steadily since 2006.
Not surprisingly, more people have also sought help in settling their outstanding bills as more and more continue to live on the 'never-never'.
A few months ago, it became possible to pay your ERP charges by credit card. True, this means some added convenience for those who pay their credit card bills in full every month.
But what about those who don't?
To them, this amount will add to what they owe - and what they pay a high rate of interest on.
Not the best time?
I wonder if this economic downturn, with burgeoning debt and credit card defaults, is the right time to introduce such a facility.
Also, a few days ago, Mastercard revealed that one of the top items consumers used their credit card for was utility bills - payments made to telcos and power companies.
Again, if you clear your credit card bills every month, this is a good thing.
In addition to the convenience, you may get rewards and rebates on these recurring payments.
But what happens if you don't or can't pay? The punitive interest piles up.
The question then is, wouldn't you have been better off defaulting on the original bills rather than putting them on your credit card?
The service may be cut off, and the company may offer you an instalment plan to pay what you owe, but you are unlikely to end up in as much debt as with a credit card on which you keep rolling over your monthly bill.
The bottom line is, think carefully in these tough and uncertain times before you allow such payments to ride on your credit card bills.
The writer is a former Singaporean marketing professional.
