Ch.12

Summary
The article that I read was about the usage of credit cards. In Canada, there are more than 50 million Visa and Master Cards that nearly have 50 billion dollars charged to them, and another 24 million credit cards from retailers such as Petro-Canada and the Hudson’s Bay Company. Credit cards are accepted at many places, even around the world, and they are very convenient to use. With credit cards, we don’t have to carry around large amounts of cash, but instead, we have to pay the balance of the card at the end of each month. For most of us, this isn’t a problem, but for those who don’t make the monthly payment, it will be a problem because they’ll have to pay high interest rates. Sometimes, the credit card only requires us to pay a minimum, meaning that the rest of your balance will go over to the next month. If someone always pays the minimum, they’ll end up paying much more to clear their balance later on than if they were to clear it monthly, due to high interest rates on most credit cards.

Connection
The connection that I found between this article and chapter 12 are cash discounts. A cash discount is given to a purchaser when the bill is paid early between a certain time period, and when it’s not paid in the early period then the full amount will have to be paid.
With credit cards, when a balance is not paid by the due date, the balance will be increased, but if it’s paid on time, no extra charges will be added. Credit cards and cash discounts are sort of like opposites, but they have a similar concept too.

------------------On time/Early------------Overdue/Normal
Credit Cards----- Pay full ------------------Interest rate added
Cash Discounts---Discount off purchase-----Pay full

Reflection
When I get a credit card, or maybe I won’t get one, I will definitely pay my balance on time because after reading this article, I realize how harsh the credit card interest rates can be. This reminds me of borrowing books at a Vancouver public library when one time, I forgot to return my books for three days and I was charged a fine for each of those books for every day it was late.

http://www.cbc.ca/news/background/personalfinance/creditcards.html