The topic “Credit card: debt trap”, the thought of writing this piece came to me because nowadays, I have been receiving a lot of all calls from various banks asking to take a credit card of their bank. And, to make it more lucrative, they have all these offers such as free insurance (not necessary), life time free and their gold card which make no sense at all. It doesn’t matter whether its gold or silver or a black card. Its after all a credit card, the only difference that you will find is the credit limit and may be the incentives attached when you use it more often.

I do not get this logic of having 5-10 cards when its difficult to maintain even one. I just have 2 cards , that also I use it in case of emergency or when I know I will be able to repay it by next month , after understanding my repaying capacity. I got a friend who has 5 to 10 credit cards and he doesn’t remember how much purchasing he has done on which card. Of course, he can afford too as he has a strong financial backup. But there are people who go ahead and get more than required credit cards when they know they don’t have the power to repay.

This problem has been noticed in US as many people own minimum 10 cards and they cant pay their debts and there has been instances that people have committed suicide.

I want to ask people who get these credit cards, don’t they think twice ,whether, is it necessary? People should use the credit card after checking if the have the repaying capacity . If you see the bigger picture here, then you will realize that you will have less of debts to repay .

In India, people should remember to have debit card rather than credit card or the best example would be the condition of Americans who suffer from debts. One of the episodes in Oprah Winfrey, the famous show in star world, showed how people suffered from credit card debt and one of the family nearly had debts of $60,000.00. Thats huge when you compare it to INR.

Now, people can take few precautions before getting a credit card. One, a check is it required, second- can you can afford to have a credit card and before using the card you should check have you met your basic necessity, have done enough savings for the future and then you may use it or else you know where your going.

Is the person who has overextended credit a candidate for sympathy if he means well? He wants to pay back the outstanding amounts against his multiple credit cards, but what if he has just been fired from his job and cannot make his multiple credit card payments? Do you castigate him, telling him that he made the bed, he must lie in it? If that is so, does your lack of sympathy extend beyond the fact that recovery agents came to his house when he wasn’t at home and threatened his wife and child?

If you are the sympathetic kind (especially if you also have been in a similar jam) would you:

1. Tell the man that recovery agents are not allowed use force on borrowers or speak indecently to him or his family?
2. Tell the man that if he doesn’t want to speak to the recovery agent, the agent has to respect his wishes and withdraw?
3. Point out to him the RBI stipulation that “The bank and their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude the privacy of the debtors’ family members, referees, and friends, making threatening and anonymous calls or making false and misleading representations.“?
4. Point him to the Banking Ombudsman site www.bankingombudsman.rbi.org.in where he can lodge a complaint?
5. Point out to him that his best option would be pay off the entire amount. And then give him tips on how to do it - apply for a loan against property, stocks, insurance policy, or jewelry? But that he should try his best not to go for a settlement?
6. That there are credit counseling agencies, such as ICICI bank’s Disha, that exist for the very purpose of helping people like him?
7. All of the above
8. None of the above

Here are some credit counseling agencies:

• Abhay (Bank of India), 61 A, Sadanand, 1st Floor, Above Bank of India Branch, Gokhale Road (north), Dadar (West), Mumbai- 4000 028. Call 022-24221843.
• Disha (ICICI Bank), Prince Apartments, Ground Floor, Karani Lane, Ghatkopar (West), Mumbai 4000 028. Call 65971815/86/87. Visit www.dishfc.org
• Union Mitra (Union Bank of India), Union Bank Bhavan, 239, Vidhan Bhavan Marg, Nariman Point, Mumbai- 400021. Call 022-22896502.

Answers:
Correct answer - Option 7
Incorrect answer - Any other option or combination of options
So incorrect that it scares me! - Option 8