Useful data
Although credit cards, in particular, have been criticized in the past for various reasons, mainly due to improper use on behalf of the card holders, more and more are being used, reflecting a clear growth dynamic. More specifically, according to the Bank of Greece, in late June 2023, active payment cards in circulation amounted to 20.1 million, with credit cards posting an increase of 1%. The average number of transactions per credit card has remained unchanged at 27 transactions, while the average value per transaction when using a credit card has decreased to €47 from €48, posting a decrease of 3% compared to the last semester.
Although young people are more familiar with the use of credit cards, they also seem to be the ones who tend to overlook the basic obligations deriving from their use. According to a relevant survey by IMR/ University of Nicosia, on behalf of the Youth Board of Cyprus, more than 4 out of 10 students (42.2%) wrongly assume that they can use their credit card up to the amount corresponding to the card’s credit line, without being under obligation to make payments at specific intervals. Only 3 out of 10 (34,2%) were aware of the repayment obligation, while 2 out of 10 (21,6%) didn't know if there was such an obligation.
These conclusions reveal the need to educate young people on the rights and obligations that come with the proper use of credit cards. For example:
Before you get your card
1) Select according to your needs: Before you begin your market research, it's wise to be clear about the reasons why you want to get a credit card. Is it because this way you can get reward points when you shop at your favourite store or get free miles that may be useful because you study or work away from home. In other words, it’s your needs as a consumer that will determine the type of credit card you choose, which you can of course replace with another type of card if your needs change over time and provided you meet the applicable credit criteria.
2) Don't apply for more cards than you actually need: A general review of your solvency and credit standing will be carried out before the approval of your card application.
After you get your card
1) “Interest-free” power: Credit cards can help you pay for a purchase or repay your dues in interest-free instalments. This is one of their main attractions, but use it prudently! Because while the instalments are indeed interest-free, they are only so when they are paid back on a timely basis.
2) The reward: The reward programs associated with cards are always a good reason to use your credit card. Just make sure you really need to make the purchase and you’re not carried away by any discounts or refunds offered.
3) Avoid making cash withdrawals with credit cards: It's best not to make cash withdrawals with credit cards. Because upon making the withdrawal you'll immediately be charged with interest, which in the case of credit cards is high.
4) Using your card abroad: When you use your card abroad it sometimes bears different charges – and these are usually higher –. So, to avoid any unpleasant surprises, you should contact your bank to find out the applicable rates and charges.
5) Transaction Security: It's necessary to know and make every effort to minimise the risk of fraud through hacking of your card. Start by avoiding saving your PIN, as well as other card details, when you carry-out online purchases and by regularly tracking your card and account history to prevent any suspicious charges.
Your credit card can be a very useful tool when it comes to paying expenses, whether planned or unforeseen. As is the case with any financial service, you need to be cautious and prudent in your use of the service so as to ensure that it doesn't generate more problems than it solves. The key is to be well-informed and to understand the terms governing the supply and use of your card, so that you can truly benefit from its use.
Sources:
Financial Stability Review, Bank of Greece (BoG) Financial Stability Review