Who could have thought that credit card spending offers a peep not only into the financial health but also into the behaviour of a person!
Credit cards, these small plastic things in your wallets, offer so much confidence and convenience! Planning an impromptu outing with friends after work? Don't worry you will not have to run to the ATM first. A great offer on a trendy bag? Can't wait for the salary credit, the credit card is your saviour!
However this small wonderful thing has the potential of becoming a huge menace and can land you in trouble. What is more your credit card spending can offer some great insights into your behaviour too; surprised just read on...
1. The meticulous one
Well looking at credit card statement you can make out that a person is perfectly organised and is absolutely meticulous. They will always have perfect payment records: no blemishes, no late payments and no fines in their records.
They will always make sure that they first pay their bills and dues on the exact day without fail (if paying through credit card) and then depending on that they will carefully plan out their rest of the expenditure on the credit card.
They are careful about the reward points, money backs and so on. Their spending pattern (generally) will be same from cycle to cycle and will rarely show any sudden blips. If there is big expenditure coming be sure s/he has already figured out months in advance when and how to take care of it.
2. The impulsive one
Well then there are those who cannot resist temptations, as hard as they may try. These are good souls who can sometimes be enticed by the lure of shiny things in the shop windows, or the 50 per cent sale offers and so on. Their statements will from time to time see a sudden huge expenditure which they might find difficult to pay at the end of the month; thus forcing them to pay the minimum amount.
These people may regret their decision immediately after making it but are unable to control themselves at the spur of the moment.
3. The sloppy one
Yes you can make out a sloppy person by looking at their credit card statements. They are careless; period. They cannot be bothered to make their payments on time whether it is the credit card dues or their utility bills. So one month the telephone bill is paid on the 7th, one month it is on the 30th and one month it is just not paid and the next month it is paid twice with a fine!
The same applies to their credit card bills too; sometimes it is paid on the due date, sometimes after three days and sometimes maybe after a few reminders. The spending is all over the place, there are fines and charges to be paid, and they are not bothered about credit utilisation ratio and so on.
4. The cautious one
These card holders are cautious about their card usage just like everything else. They are not likely to use the credit card much irrespective of the credit limit they have; one can spot one or two transaction once in a while and yes the payments are always made on time. They are likely to use their card rarely; they are wary of using it too much as they are afraid of being too dependent on credit or due to general mistrust about card companies or the fines and charges they may levy.
5. The living beyond means one
Unlike the sloppy one they are not forgetful or careless about their spending; they are the kinds who despite being aware of their means and credit card limits tend to cross them. They might often find it difficult to pay their dues at the end of the billing cycle.
The credit card spending is always maxed out; if there are multiple cards then all card limits will be maxed out generally. They are likely to have roll-over credit, delayed payment and defaults frequently.
They may resort to the balance transfer option more than once to pay off their dues. They are just a step away from falling into a debt trap or may be already there.
Illustration: Dominic Xavier/Rediff.com
The author is Co-founder and Director Credit Vidya.