iDentistry The Journal identistry_may_aug2019 | страница 23

The Journal
*Dr. Bhavdeep Singh Ahuja
FINANCE for DENTISTS – Part VII :The Current Scenario
(P.S. : On huge public demand, I have extended this article and now it will be published in a few more
parts, this is Part 7 of the same).
(We discussed about credit cards and their various aspects in Part 6 of this series of articles.
Let us continue, take up the remaining aspects of credit cards and finish the subject of credit
cards in this Part 7 of Volume 15 No. 2 : May–August 2019 issue of
iDentistry – The Voice of IDA Punjab)
While there are many healthy and productive ways to use debt, credit card debt unfortunately and
typically speaking is not the best, due to its high annual percentage rate (APR) and compounding
interest phenomenon. However, it is important to differentiate between carrying a debt and using a
credit. Using a credit card doesn't automatically mean that we will end up in debt because it is 100%
practically possible to use credit cards for every single purchase we make without ever paying a dime
in interest back or ending up carrying any debt whatsoever. Thus, having and using a few credit cards,
albeit responsibly is an important part of maintenance of overall credit rating or CIBIL score of an
individual. The CIBIL score is a numerical representation of all of the raw information in our credit
profile. It is made up of a few components (see image below), including our history of on-time
payments, how much outstanding revolving debt we have proportionate to our total credit line, the
average length or age of our credit history, how often we have requested new credit and different
types of credit we have like car loans, education loans, personal loans etc. and loans on credit cards
as having a few differential types is always better and healthy for a good credit rating or CIBIL score.
By using the credit card and paying it on time, we also establish a pattern of on time payment activity
as well, without having to pay any additional fee which again helps our credit score. While debt can be
expensive, there are always better ways to use it productively and safely. By opening and holding
several credit cards (only, if we can manage responsibly), we can show that we are responsible and
able to handle credit, which can also help us make sure that we practice normal financial discipline as
well and not spend money that we don't have on our credit cards. We have deliberated on some
aspects of credit card in the last part of this series. Let us continue further.
A Normal Credit Score Break–up
(Image Courtesy: Google)
*Practitioner in Ludhiana, Punjab
23
Vol. 15
No. 2
May-Aug 2019