Josephine Tay (above), a 20-year-old student in the London School of Economics, gives a first-person account on owning a credit card
I WAS recently given a credit card with a spending limit of £1,500 (S$4,660) by Lloyds TSB, my bank in London.
The form came with the words 'pre-approved' and '0% interest for six months' in big, bold letters.
Apparently, being incomeless and holding an international passport did not deter the bank from extending credit to me.
So I took the card, despite already owning three debit cards - two in Singapore, one in London - and two supplementary credit cards.
But since receiving my Lloyds Classic MasterCard, I regret to say this enthusiastic card user has yet to start using it.
It is hard to imagine why, since I live off Oxford Street, a huge shopping mecca, and right beside the Selfridges flagship store and a couple of blocks away from a five-storey Topshop.
The idea of a shopping spree at zero per cent interest has certainly been alluring.
But every time I whip out my brand-new £1,500 credit card, phrases like 'waiver on annual interest subject to minimum £200 expenditure within first three months', 'monthly interest rate', 'annual interest rate' and 'interest is charged from date of purchase' swirl in my head. And I end up reaching for my debit card instead.
I am not usually too prudent or thrifty, but the thought of ending up in huge amounts of debt in pounds is enough to deter me from using the card.
After all, I don't want to leave a bad credit history in London.
And if I default on my payment, I would probably be hauled to court and declared bankrupt before I even start on my first job.
But surely it is quite difficult to run up that huge a debt, I sometimes think. Not really, especially since I am still not too sure how those monthly and annual interest rates are charged.
Also, I don't really need to use my credit card since I have a debit card that does everything for me - from making online purchases on iTunes to booking concert tickets over the phone to buying airline tickets.
Even when I had to buy a MacBook to replace my stolen laptop, my debit card could cover that £1,000 purchase without incurring an interest charge.
So what made me get that card then? It said 'pre-approved', for one.
Plus, I wanted to spend without having my parents issuing warnings or making curt comments every time they received a bill that reflected my (one too many) trips to Harrods and holidays to the continent.
Dad, who is in property development, and Mum, a lecturer, clearly do not define 'necessary expenditure' the same way I do.
Also, I figured I could save them some money on the overseas transaction charge and spare them the pain of converting Singapore dollars into pounds.
The clincher, though, was that I was guaranteed a minimum credit limit of £1,000 that I was not accountable to anyone for.
On the other hand, I have a friend in his final year at New York University who took out his first credit card when he opened an e-trade account.
He used it only when he hosted dinners or bought expensive items. Well-versed in financial knowledge, he understood the risks and rewards of using his card.