Are You Taking Fancy Credit Card In The Name Of Building Credit History?
- Escribo Writings
- Feb 11, 2022
- 2 min read
India’s credit card penetration is 3% - 4%. Which is not a bad thing at all in a country like India. India is a low-income country hence the cost of giving credit is very expensive. The situation gets difficult for the Reserve Bank of India about the debt scenario in the country. You might have seen our government has not flushed enough money into the economy when compared to the United States of America as we cannot afford to increase debt at the same rate as they can. Only a handful of institutions can issue credits cards this is because RBI is worried that if credit card issuing is given to many other players this might lead to an increase in the bad debts of the country.
If small NBFC’s (Non-Banking Financial Company) are given the liberty to issue credit cards facilities they will start going behind high-risk profile individual, in return, there might be chances that some individual defaults the re-payment which can hamper the banking industry and the economy as a whole and create a ripple effect.
Now talking about fancy credit cards their main aim is to give everyone exposure to this financial instrument as they say the financial inclusion is quite low in our country. Financial inclusion is giving every person equal opportunity to access financial services. Their main target audience is in the age group of 18-24 which is all the college-going students. Technically speaking any college-going student who has a bank account is already part of the financial inclusion story. A college-going student doesn’t need a credit card for financial inclusion.
Building a good credit score or history is a good thing but many might falter later. Taking credit impacts your CIBIL (Credit Information Bureau India Limited) score. It is a 3 digit numeric summary of your credit history this is derived from the credit history derived from your CIBIL report. CIBIL score working in India: If you take loans often it indicates you are in constant need of loans to meet your wants. It also indicates that you are not able to manage your finances well. By taking those fascinating credit cards it shows you are a debt lover and creates an impression that you have risky behaviour.
A credit card should only be provided to those individuals who will use it for some productive purpose. Giving mindless debt to high-risk profile people will only increase the risk profile of everyone in a high credit risk economy. Do you have one?
Writer - Mayank Choudhary
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