With the enormous penetration of credit cards across various economic classes in the country, the financial scenario in the country has witnessed an enormous transformation. Gone are the days when people would amass penny by penny just to buy that much besotted jewellery set, or to go on that much-longed holiday. But with the influx of credit cards, which has had a massive impact on our spending pattern, people do not have to wait to have their own taste of luxury. This can be observed with the help of the fact that the top three purchases made by Indians through credit cards are travelling, dining and jewellery respectively. A couple of years back jewellery and apparel accounted for the highest purchases in the country. Fuel still holds a very small percentage or share in people’s spending pattern, since many people choose to fund them by debit cards.
Unlike any other form of credit, credit cards are also quite risky when it comes to repayment of debt. If you do not observe great financial discipline, it can cost you a lot. You might be forced to opt for further debt like a personal loan or any other kind of loan to repay the debt on your credit card. Also credit cards are that form of credit that carry the highest interest rate burden unlike any other form of loans. Therefore do not observe the feature of rolling credit seriously as it can ruin your financial stability by prompting you to pay higher interest rate payouts than what you had originally agreed upon. So in order to keep your finances buoyant make sure that you repay your credit on time without carrying it forward to the next month.
Credit card companies believe that customers are expected to increase their dependence on credit cards on an annual basis, propagating a growth pattern of approximately 50%. Many sectors that were initially ignored by customers are now seen as golden avenues by credit card companies as people are becoming aware of growing trends and global tendencies. For example, travel was initially a much smaller segment before, and many people did not depend on credit cards to fund their travel dreams and expenses. Today credit card companies view the travel industry as an avenue to attract a large number of customers in their hold, making it the largest sector for credit card purchases in the country. This trend is expected to gain momentum in the following years as travelling and eating out has become a norm of the day, even in regular middle-class families.
While other segments like fuel, regular consumer durables and jewellery still account for a small share for the total average spending in the industry, trendy sectors like eating out are expected to grow and maximize in their demand, size and popularity. Today, credit cards are the unprecedented leaders in the world of plastic money, followed by debit cards that are mostly used for cash withdrawals and other minor purchases. Plastic money has also been used as a major tool towards the payment of utility expenses over the last couple of years. People are now using credit cards to pay their electricity, water and telephone bills, showing a trend on how people depend in credit cards for sheer convenience and ease. Many people also purchase day-to-day commodities with credit cards citing it as an easier mode of payment than carrying cash in hand at all times. It is thus best that while you depend on these cards for indulgence and necessities, use these cards by spending in moderation, to avoid any form of debt in the future due to reckless spending.