The reason given by our government to impose a $50 annual service fee on all credit and charge cards was to promote prudent spending. Although the percentage of people who are using their credit and charge cards responsibility is relatively small, I think that this annual service fee will not change how someone spends.
I have a friend who maxed out on her credit lines not because she shopped too much, or overspent. She purposely took out cash advances on various credit cards that she owns to pay off debts that she accrued from failed investments. That’s not “spending” in the true sense of the word.
This friend, whom I shall not name, said that it’s better than taking out loans from relatives who will talk behind her back or loans from loan sharks with their ceiling high interest rates. She said that as long as she is able to pay the minimum on her balance of her credit cards, no Collection Agency
will come after her.
Of course, this isn’t the way to use a credit card. However, with the imposition of $50 annual fee, does the government really think that it will deter such kinds of users who need credit cards not for shopping but as lenient credit lines?
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