Credit Card Debt – A quick analysis with effects and management

Analysis CCard

Credit cards have become a byword for quick payments and easy transactions. Although it starts with a level of pedigree and financial power, it can quickly spiral downwards towards an abyss of debt.

Thinking of jumping on to the Credit card bandwagon? Keep in mind that, credit card debt affects your credit score and can lead to loan application rejection by banks.


Credit Card Debt

Credit Card debt is very common in India. As per a study in 2016, there are 24.51 million credit cards in operation in India. Although how many credit cards each user owns and of those how many were submerged in debt are not disclosed.

Where does this process start? It begins when you sign up for a credit card and agree to comply with the following basic terms:

  • Monthly payments towards the credit card bill
  • Penalty fees in case of late payments
  • A stipulated maximum amount of available credit
  • Interest rates levied on any balance

Credit cards increase your perceived purchasing power, allowing you to pay for expenses beyond your earnings, without delay. It is however essential to use it responsibly and be careful to not let your spending power become uncontrollable.


The Effects of Debt

Most often, expenses creep out of nowhere and paying it off via your credit card seems like the only solution. For such cases having an investment plan in place is a good idea.

Practices that can move you towards credit card debt:

  • Using the credit card for a cash advance
  • Paying only the minimum balance and carrying forward the balance
  • Not making credit card payments on time
  • Exceeding the credit limit


Manage your Credit Card debt

  • Pay your total monthly dues by the due date
  • Track and manage your monthly spending pattern.
  • If needed, consult a Credit Card counselor to prepare a financial plan

So there you have it! If you are prompt with your payments and planned with your finances, you can overcome Credit Card debt successfully.


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