The death trap

The lure of Credit Cards

http://www.chillibreeze.com/articles_various/Credit-Cards.asp#a

When Rahul decided to marry his college sweetheart Aditi against their respective parents’ wishes, he had no qualms that he could give his would-be wife all the luxuries of the world that she was so used to since childhood. After all he was a MBA Graduate from a reputed B-school and had a highflying career ahead of him. Aditi, on the other hand, was a graduate from Delhi University’s St. Stephens. Her rich, orthodox family wouldn’t let her work as they felt it would be an impediment to getting her married.

Undeterred by the stiff opposition, the duo decided to elope. Totally appalled by this decision, both sides of the parents decided to disown the two. Though Aditi was a bit skeptical as to how they would run a family, Rahul was more optimistic. The initial bloom of marriage swept the two away. A honeymoon in Mauritius, a diamond set for his beloved wife, those ten days were sheer bliss. But they had to face reality the moment they landed at the Indira Gandhi International Airport, New Delhi. Both were scared of the uncertainty that awaited them. But they hid their doubts well. After all they belonged to the socioeconomic category - `SEC A’.

The newly wedded couple started staying in a two-room apartment that Rahul had bought just prior to the wedding. Rahul soon rejoined his office. Rahul wanted Aditi to work, but being the dutiful Indian wife, she first wanted to setup her household. So after Rahul would to leave for work, armed with a long list, Aditi would head shopping for her house. Soon their two-room apartment became a home. From new beds to curtains, from sofa set to dining table, from crockery to white goods, they now had all the luxuries at home. Rahul even entertained his office colleagues at home to celebrate his wedding. He wanted to show-off his beautiful wife as well as his beautiful home.

Life was going smooth until everything shattered, suddenly... While Aditi was planning a grand surprise for their one-month anniversary the next weekend, little did she know that all her plans were going to be ruined. Rahul returned from work one evening with a big frown on his face. He didn’t give Aditi the customary hug and went straight to his room. Aditi entered the room to find Rahul staring hard at a bill.

It was a credit card bill from Standard Chartered. When Aditi saw the outstanding amount she almost fainted. Aditi was shell-shocked. “Rs.4,52,000 outstanding! How come?” Well, what did they expect? A trip to Mauritius, diamond set, furnishing their house, throwing a party – all this in Rahul’s fifty thousand-a month- salary. To top it, there was the repayment of the house loan and the car loan. Where was the money for the rest? Rahul & Aditi had fallen badly into the trap set by banks that coax people to take loans or credit for whatever amount they desire.

Reams and reams have been written on how the economic boom in India, changing lifestyles and easy availability of credit facilities lure even the sanest person into the deadly yin and yang trap of credit and debt. The buy-now-pay-later syndrome has gripped the 300 million middle class Indians. For them it’s an easy way out to satisfy their growing aspirations for high life and fast cars. What’s worse, by paying the minimum amount due on their outstanding bill, people are being sucked deep into the credit vortex. After all it’s all about today. Who cares about tomorrow! That’s the mantra that today’s Gen-Y is following. The ‘I-care-a-damn’ attitude. Young executives, just of college are easily swayed by the kind of liquidity that a credit card offers. Credit card companies also go all out to lure an unsuspecting person with the bait of high credit limits, personal loans et al. But what that person doesn’t realize is that while it’s easy to whip out that piece of plastic and pay for what he/she want, it’s equally easy to fall into the deadly debt trap that can wreck one, financially as well as emotionally.

The double whammy of high inflation and rapidly rising interest rates has further added to the woes of middle class consumers across the country. Families across the country have seen their EMIs going up by over 20% in the last one year. Investments have taken a beating and savings are being eroded. But the credit epidemic has not subsided; rather it has gained more momentum, as it has become very difficult for a family to cut its existing lifestyle.

The result: more friction in the family, severe depression and in worse situations people have found no other option but to commit suicide to get out of the debt trap. A case in point is that of Prakash Sarvankar of Mumbai who committed suicide in September 2007. The 38-year-old was allegedly harassed by recovery agents of ICICI Bank in the presence of his family after he defaulted on payments of a personal loan. Humiliated, he committed suicide the next day, leaving behind a wife and three daughters and a lot of grief. A similar case is that of 34-year-old Himanshu Dev Sharma, who committed suicide on October 21. Goons (in the garb of Recovery Agents) of ICICI Bank took away his motorcycle after he defaulted just once in paying his EMI of the motorcycle loan.

There are several Prakashs and Himanshus in India who have fallen badly to the debt trap. For them the debt trap has become a death trap. People, especially the young generation need to realize that it is easy to fall prey to the trap, but extremely difficult to get out of it.

And for Rahul & Aditi, it was a lesson learnt well, that a credit card, if used judiciously can be a real asset but if used to splurge can lead to a highly volatile situation.