ON a recent trip to Europe last month, my friends and I trekked through a small portion of a beautiful Croatian national park in the middle of the country called Plitviče (pronounced plit-vit-zeh).
The park covers almost 300 square kilometres and is a United Nations Educational, Scientific and Cultural Organisation (Unesco) world heritage site. It boasts 16 terraced lakes of staggered elevations with magnificent cascading waterfalls.
On that strenuous day, despite numerous stops for photos of the scenery, I was exhausted, cold and damp after our three-hour trek. So, after using the clean public washroom, I made a beeline for a little cafe near the jetty where we would catch an electric boat with a capacity for 100 passengers to sail across one of Plitviče's lakes to get to our coach stop.
Before I joined the queue with other tourists for the boat, inside that warm cafe, I was glad to see the words "hot cafe latte" on the menu.
Before I go on, here's some context: I over-prepare each time I travel, be it domestically or internationally. I always pack too many clothes and carry a lot of cash in whatever currency I need. You see, I subscribe to the second half of a philosophy espoused by Joe Louis, one of the greatest heavyweight boxing champions of all time. He stated:
"I don't like money, actually, but it quiets my nerves."
You, too?
Back to Croatia: The country joined the European Union in 2013 and switched from its local currency, the Croatian kuna, to the ubiquitous euro on Jan 1 last year. So, I made sure I changed more than a merely adequate amount of euro notes at my trusty money changer in Seremban before flying to Dubrovnik via Istanbul.
Our trip itinerary was packed, in a good way, so I found myself spending much less than I anticipated. But being — as I told you — cold and tired in that quaint Plitviče cafe, I wanted to spend some of the excess cash I was carrying. But I couldn't.
The cafe cashier told me, politely yet firmly: "No cash; card only!"
Useful flashback: The first time that happened to me, several years ago at a restaurant in Singapore's Tanglin Mall, I was irritated because cash notes of all currencies worldwide are marked "legal tender".
Since then, I've found more and more establishments, including some eateries in Kuala Lumpur, adopting the same no-cash rule.
Getting back to my needed Croatian latte…
I just shrugged at the cashier, smiled and whipped out a credit card. The tapping process for the small purchase worked instantly. That's one plus point. Another plus point was the identical pricing, meaning I wasn't charged a premium for using my card.
I appreciated that because a few weeks prior to my Croatian holiday, I was in Melbourne on work to meet my Malaysian financial planning clients based there.
In almost every retail situation I encountered in Melbourne, I saw clear signs (good for the Aussies) stating I would have to pay an extra 1.2 per cent to 1.8 per cent if I used a credit card. Obviously since I had sufficient Australian dollars with me, I usually opted to pay the lower cash-price.
Credit cards can sometimes get people into trouble. I know. Yet, in general, it is useful to have them — for safety and flexibility — when travelling.
Personally, I ended up in credit card debt — twice — because I am a slow learner:
IN the 1980s in England; and
DURING a chunk of the 1990s in Malaysia, before the 1997 Asian Financial Crisis (AFC).
Each time I extricated myself from the insidious tentacles of compounding credit card debt, I learned useful lessons.
EXAMINE YOUR BEHAVIOUR
Because of my chequered history with those beguiling plastic rectangles, I now overpay each of my existing credit cards so that I always end up with my credit card accounts owing me money.
Illustration: For a card with a typical RM50,000 limit — ramped up over a few decades of responsible usage from the typical RM3,000 or RM4,000 starting balances of new employees in their 20s — whenever I overpay by say RM5,000, I artificially expand the amount I can charge on the card at any one time to RM55,000. More importantly, I get to spend just under RM5,000 on such a card without owing any money at all on its account.
A similar benefit — of not accruing fresh debt — can be enjoyed by using a debit card from your bank, which electronically lowers your bank balance but does not raise your debt level.
Financial guru Dave Ramsey's view is to NEVER use credit cards. Despite my own painful history with them, my perspective is different. I don't see credit cards as financial products most people must avoid, though, undoubtedly, some should.
If through stark self-examination of your own behaviour you realise you can't use credit cards responsibly, then cut up all your cards — posthaste; use only debit cards and cash moving forward; and make it your No.1 goal to pay off each credit card — from your smallest outstanding balance to the largest. ASAP.
Act wisely.
© 2024 Rajen Devadason
Rajen Devadason, CFP, is a securities commission-licensed Financial Planner, professional speaker and author. Read his free articles at www.FreeCoolArticles.com; he may be connected with on LinkedIn at www.linkedin.com/in/rajendevadason, or via rajen@RajenDevadason.com. You may also follow him on Twitter @Rajen Devadason and on YouTube (Rajen Devadason).
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