Indebtedness & Credit Cards

Credit cards - a boon or bane?

Perhaps I and my husband are a few of those who do not possess any credit card!

We knew the advantage of not having to carry money on us to distant places so we enrolled to get ourselves a couple of debit cards which would mean we can spend only what we have in our accounts, nothing more than that!!

We pay a lot of interest on temporary and long term loans as it is. Banks have to charge us for lending money as thats their basic business.

Yet when we sit down to do simple calculations on the loan taken, the interests paid so far and the balance yet to be repaid to the bank, our heads would go in a tizzy without resorting to any sedatives.

First banks encourage everyone to borrow money for purchase of just about anything these days. The repayment plan on equal monthly instalments (EMI) are very low and very attractive. They tempt us to borrow and get us hooked for many donkey years spent on repaying that sum. The first years' repayments have high interest recovery portions and very less towards capital repayment in any loan plan. When the interest and capital becomes fifty-fifty more than half the laon period is already over. By this time the bank will remind you that there is yet another plan under which you are eligible for some other loan! This continues and you have to work to repay your loans and you have to refinance often if you need extra money.
You are always in debts and the banks ensure this very subtly as they explore opportunities to trap more and more people.

Take the housing loan for instance. In India, property rates were well within means to those who could save some money from their salaries, borrow a bit from relatives and friends to buy a home. All this until the concept of home loans became popular in India. Many could buy homes no doubt. The seed money was kept at say 15% or 20% of the total value of a property with the remaining coming in from the bank after they checked your credit worthiness. This 85% to 80% component started to balloon up due to steady rise in property values from time to time. This ensured that even a high value person would be in debts for years together if he were to go in for house purchase.

But the rents going up would make all of us think of going in for a loan to buy a house and paying our EMIs instead of house rents which will work out to be the same in any case. The lure of owning a house for the payment of 'rent' in the form of EMI to the bank was what fuelled all the abnormal rise in property values even in far off places from a busy city or metro.

With good infra structure connecting places, there should be no problem of commuting from this place to that. But this also does not seem to work for many families who have one child in some school and one in college elsewhere, with dad going to office in quite another direction. Many are the choices and deciding becomes difficult with many in the family fanning out daily on their jobs. Otherwise suburbs are the answer to cheap and affordable flats.
In any case credit card or loans are not the only debts in our lives!
We are indebted to our parents for having us born to them.
We are indebted to our teachers for teaching us lessons - both acedemic and otherwise.
We are indebted to our parents for choosing a good spouse for us
or
we are indebted to our spouses for accepting us as their life partner
We are indebted to our banks who provide loans for the many things which may not have been possible to enjoy in our lives with our limited means but unlimited dreams :D
We are indebted to God for the children he gives us.
We are indebted to all those who help us in any way in doing this chore or that.
We are indebted to the medical people who take care of us while we are sick and in hospital.
We are indebted to those relatives who take care of us when we are recovering from any ailment.
So much indebtedness going around so how does a small bank loan matter. Life means to enjoy the today, the now and if enjoying means having to pay, we can always pay later and pay in easy instalments too.

Cheers!

Mahalakshmi