6 Signs you are addicted to your credit card!
Buying now and paying later is an ordinary practice whether its everyday purchases, dream holidays or consumer durables. There is nothing wrong with it unless it goes out of hand and the person gets addicted to it. Here are a few indicators that will help you find out whether or not you are addicted to credit cards.
1. Exhausting or touching the credit card limit frequently
Credit card can be life savers in case of financial emergencies; they can help you ride out a small financial storm without seeking help from others. So a maxed out credit card is necessarily not a warning sign if it happens once in a while.
However, a month-on-month pattern where your bill touches the maximum spending limit or your card is declined when you swipe it because you have already exhausted your limit (without even realizing it); it is a sure sign of worry. If often you land in such a situation, it’s time to figure out where the money is going, what is the spending pattern, and whether are you buying on impulse? Also, a high credit utilisation ratio negatively impacts the CIBIL score.
2. Constantly applying for
Getting cards is very easy these days. Often you get calls from the credit card companies telling you how convenient it is to get a new card, that there are no charges or that the credit card is being offered free to a select few. So in case one exhausts the card limit of one or more cards, getting a new one to swipe and shop is not at all difficult. Mostly people oversee the fact that while you may chose to forget your debt; your debt will not forget you and all defaults reflect in your CIBIL report for a period of five years. So if one is on a constant lookout for new cards because the old one is exhausted, then it’s definitely a reason to worry about.
If all what is earned is spent every month, then it is not a good sign for the financial health. Irrespective of how much one earns, the income should ideally be saved every month. If you find that despite budgeting you do not save anything or there is nothing at the end of the month left to save, it’s is a red signal. And if you find yourselves dipping into your savings to pay your monthly card bills, then it is a red signal with capital “R”. It’s like a double jeopardy, you are not only eating away all the earnings and not keeping anything for a rainy day, but whatever you have saved in the past is also getting eroded away. The urge to spend and use the credit card makes planning go awry.
If you hide your bills from your family or spouse, then also it’s an indication of an addiction to the credit card. Not wanting to discuss your spending because you also know it’s not a healthy pattern. On the other hand, if your family not being aware of the enormous credit card bills that one runs every month, this is another sign of addiction.
6. Paying only the minimum amount
Another indicator of the addiction is paying only the minimum amount due every month, as there are no funds available to pay the full amount. The bills and charges keep rising but the credit card company does not take any immediate action as the minimum amount is paid, so the debt keeps adding up. This is potential trouble which can blow up at a later stage
Credit Card addiction can cause a lot of financial damage and may tarnish your CIBIL report for a long time. So in case one feels that they exhibit any or more of the above signs or the thought of not having access to your credit card worries you, then it’s time for remedial action.
(About the author: Rajiv Raj is the Director and Co-Founder of www.creditvidya.com)
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