ARE CREDIT CARDS A DEBT TRAP?
This question is frequently asked by people who do not have a card but intend to buy one. They have heard or read about some stories where people have actually committed suicide due to the debt burden created through purchases from the credit cards. Although, such incidents have usually been reported from advanced countries of America and Europe, yet with the aggressive selling of Credit Cards in India, people fear that many of them may fall into the debt trap.
Everyone knows that credit cards are much more convenient to use and safer when compared to actually carrying cash for shopping etc. However, it is also true that one is lured to spend more than what his pocket allows, as Credit Cards offer instant credit. It really pinches when the bills arrive. It will still pinch greater when you pay in installments and the bill have interest added to the principal amount.
Indian people are usually shy of taking frequent debts. Therefore, they are also afraid of taking a credit card. However, we are of the opinion that there is nothing wrong with the Credit Cards. They are a unique instrument which allows you instant cash or purchasing power (Remember, Sachin's ad. of "VISA Power".). However, it has to be remembered that you should plan your purchases in such a way whereby you do not feel the pinch of paying the installments. It can be of great advantage, if mostly you are able to settle the bills by due date. In such cases you will be able to enjoy the credit for few weeks without any hole on your pocket, rather sometimes you may be able to earn some extra interest on your savings in your bank account.
Therefore, it is wrong to say that Credit Cards are a debt
trap. These must be used judiciously and keeping in view your future
assured incomes. However, if these cards are used recklessly then
you are sure to face number of problems.