Since we’re in the middle of a pandemic, we’re all trying to figure out the new normal. Whether we are working from home or facing financial uncertainty, everyone has at least a little adjusting to do.
In the middle of the global crisis– COVID-19, many people are dealing with a sudden financial crisis, ranging from pay cuts, delay in salary to job loss. Along with the pandemic, the nationwide lockdown has also impacted all. Most people in the state are using their credit cards to help them get through the crisis. Credit card usage in India has increased exponentially within the past few years and there is an interesting shift in people’s preferences. New users are especially subject to making mistakes when using credit cards.
Getting your first MasterCard may be a major financial step. Used properly, credit cards offer a versatile way to cover unexpected expenses and build an honest financial reputation. However, used irresponsibly, credit cards can potentially cause long-term debt and difficult financial situations. Credit cards come with their risks, limitations, and costs. For instance, one could easily have high-interest debt, which can put the cardholder in a more precarious financial situation. With credit cards, one can keep suspended for only so long, as the debt increases with the high-interest rate and eventually it has to be repaid.
Credit cards are not a solution to a permanent loss of income, however, for short-term disruption of finances, it can be the easiest way to ride out the storm. Amid this pandemic, if you’re among them who are already feeling the squeeze from credit card debt, adding more to your credit might not be an option.
People have started using the credit cards as they are having a lack of payment, income, and other situations to pay rent, utility bills and are also taking the extra credit period to settle the amount with the company. But, experts propose that the repetitive use of such a payment option can have a serious impact on one’s finance.
Credit Card debt is one of the most expensive ones, as the interest rates charged on credit cards are very high when compared to other types of instant loans. In case the cardholder is unable to repay the credit card bill on time, the outstanding balance due on a credit card gets charged at an interest rate of about 36 to 48 percent per annum Although it changes from banks to banks, the cardholder who fails to repay the minimum amount due on their credit cards is charged an extra late payment fee of around Rs1,000.
Thus, one must find a different way to pay their expenses, as excessive use of a credit card can throw an individuals finance into disarray and, using your credit cards for monthly essentials or bills will only give you a free period of about 45 days.