One day, I received a call on my cell phone (unsolicited) and a sweet talking voice announced that it’s a call from Xyz Bank and that I am the lucky one selected from their database being eligible to receive a free life time credit card with a credit limit of 1 Lakh Rupees. Sweet talking voice also informed that I will be eligible to receive free accident insurance, club membership benefits, discount coupons, festival offers, cash back facility, blah blah blah. Sweet talking voice asked for the confirmation when to send Bank’s executive to complete the paper work.
I fixed up a time for that and started dreaming as to what are things I can do when I receive my credit card
Ø I can buy latest clothes, sports shoes, mobile phone etc.
Ø I can also buy latest model of IPod, Digial camera, DVD player
Ø I can go on a trip to Goa..Kumarakom..
Ø I can take all my friends to that chic pub for my birthday party
The list continued to grow longer and longer till I fell asleep.
Next day when I was about to start-off to office when I received a call from another sweet talking voice. This time the voice announced that she has come know about my intention to apply for a credit card and a Certified Financial Planner would like to talk to me about an alternative plan. She also informed that she will send a vehicle to pick me up from my workplace during the lunch break to meet up with CFP and discuss the alternate plan over lunch and that I will be dropped back to my office in time. I agreed for this meeting with CFP thanking my luck.
I was promptly picked up that day afternoon and driven to a posh hotel. There was waiting for me at the lunch table a gentleman in a blue suit with a laptop kept ready on the table. As soon as I sat down after thanking him for the kind offer, with a waive of hand he called a waiter and ordered for the lunch. The next moment he started off with his presentation about an alternative plan to credit card – a “Pay for myself” scheme.
Without wasting much of your time, I give here the gist of the alternative proposal. I still do not know how this CFP had all my personal information but here they are
Credit limit available in Xyz Bank’s credit card – Rs.1 Lakh
Amount I intend to use in the next 15 days through credit card – Rs.1 Lakh
My monthly surplus after accounting all my expenses – Rs.6000/-
Minimum amount I need to pay my credit card – Rs.5000/-
When I will be fully repaying the credit card loan at this rate – nearly in 31 months
Total Interest I would pay the credit card company – Rs.55,000/- Rate of interest – 36% Per annum
The strange alternate plan CFP proposed was some what like this.
Postpone my purchases till such time I have enough cash in my bank account (in any case you can live without them!)
Save an amount of Rs.5000/- every month through an SIP in a mutual fund
At an expected annual return of 12%, in roughly about 18 months I should have a sum of Rs.1 Lakh in my mutual fund account
Spend the money as I like from the mutual fund account with the condition that I will repay the amount to my SIP account every month
I may be eligible to get some cash discounts on my purchases
I suddenly stopped eating my lunch. My blood boiling with cold rage, I started yelling at the CFP about his stupid idea of saving first and then spending my own money. Why should I do it when I have the option to use Xyz Bank’s money and the easy option of paying in installments. After paying part of the amount, I can use the balance credit limit again (my list was not fully exhausted when I spend lakh of rupee using my card) and I can keep paying the minimum amount to the credit card. It’s cool using the plastic money!
The CFP interrupted in the middle and informed with a smile on his face that I will continue to work for the sake of credit card company and not for myself and If I continue to use my credit card in such a manner, all my surplus income will have to be given to the bank. I really got wild with his utterance. I picked up a glass of water on the table and threw the contents at CFP. With annoyance I noticed the CFP suddenly vanished in to thin air and somehow all the water turned and fell on my face.
I woke up suddenly from the sleep to realise that all this call from CFP and luncheon meeting was just a dream. I started off to my work with the happy feeling that I will be meeting the executive from Xyz bank to apply for a life time free credit card.
If any of you meet any CFP any time, be forewarned. They will ask you save your own money first and then spend. They will also ask you to pay for yourself instead of paying to credit card company.
