Plastic Pitfalls

Beware, credit cards spell more trouble than the comfort they promise. Like cars, recklessness can be costly

Cars and credit cards, they say, kill. Not always necessarily, though. But if you are not careful with them, both can be fatal. More than five decades after Diner’s Club founder Franc McNamara introduced the concept of plastic money to the world, this staple of middle-class life spells more trouble than the comfort it promises. That is, again, if you don’t use it judiciously.

It is a club where the numbers are only swelling every day. With an estimated 20 million cardholders in India today—experts say the number could reach 30 million by the end of next year—it is an industry that threatens to grow exponentially. The expenditure through cards, says Shashwat Sharma, associate director, advisory services in KPMG, would rise to Rs 65,000 crore this year, at least Rs 25,000 crore more than last year. After the platinum, titanium, gold and sundry such cards in the market, now there are credit cards for kids too. Yes, even kids!

But, beware. It is also a trap into which most of us inadvertently fall headlong. The spend-earn-pay cycle has led to a massive attitudinal change amongst consumers, most of whom splurge recklessly. And by the time you are through with your spend party, or realise the enormity of the problem, you are drowned neck-deep in debt. The trouble with credit cards is that the trouble starts only later, when you start feeling the pinch of credit. Remember, once the noose of the debt trap starts tightening, it tightens pretty rapidly.

Read more at: Plastic Pitfalls