Your swanky credit cards could land you in debt trap

Indians have traditionally been savers rather than spenders. But rising income levels, increasing consumer choices and easy credit availability at low interest rates is having its impact. DNA explores how to spend within limits.

Debt repayment should not exceed 30% of one’s income
In the US, debt addiction was not high in the 80’s. The US government as a policy measure told the banks to give loans. If the corporate houses didn’t borrow, banks were supposed to find innovative ways to give loans to individuals. In the US, as a result, an entire generation is used to excessive spending.
Debt in itself is not a bad idea and economic growth is generated when people keep on buying. Some debts are necessary, when you cannot postpone consumptions, like buying a house, car or spending on education.  To live within one’s limits, the expenditure needs to be prioritised. My advice is that anyone who is going for loans must make sure that the repayment of debt does not exceed 30% of one’s income.
— Nilakshi Louzado, investment advisor

One should save in long term investment options that offer safe returns
I have never used a credit card in my life and don’t even want one for status symbol. People don’t understand that credit card is a tool for spending money on unnecessary buying, on which you are paying an interest. Personal loans make people run for repayment, while banks become rich. People must curb on their addiction to debts and live within their limits. I would suggest that one should save in long term investment options that offer safer guaranteed returns. One should at least save 35% of their income by parking it in various investment options available in the market.
— Vivek Chaudhari, personal financial advisor and planner

Repayments of debts must be thought out before taking any loan
All banks and financial institutions will innovate newer ways of lending money. Given the phase of development in the country and to achieve a particular standard of living, it is very difficult to avoid the charms of going for various credit tools offered by banks. The only way to get out of the debt trap is to plan your spending. Understanding your credit limit and staying within your limits is necessary. Repayments of debts must be thoroughly thought out before taking any loans.
— Zubin Kabraji, regional director (Pune), Indo-German Chamber of Commerce

We still have parental hold on spending within a family at household level
I don’t agree that in India we are falling into debt traps. Compared to Americans, we are still conservative in our spending habits. This might be true only for a certain section of the new generation falling into debt traps. I don’t foresee the problem of debt addiction in India. We still have parental hold on spending within a family at household level. Majority of us still don’t mind spending in anticipation of equal returns. I don’t think the percentage of our overspending is very alarming. Important is that we look into our spending habits. 
— Abhijit Atre, secretary, Software Exporters' Association of Pune

Not going for loans due to fear of getting into a debt trap is not a right approach
We cannot be bound by financial limits, on what we can afford and what we cannot. Due to globalisation, which is generating the economic boom, we cannot hold ourselves back. Not going for a loan due to the fear of getting into a debt trap is not the right outlook. The reality of credit card is that you don’t have the money but it still gives you the purchasing power. It is a debt trap if you don’t use it smartly. How to avoid getting into a debt trap, is what one needs to learn. For example, if you are buying a laptop on loan, you will end up paying more than the actual cost. However, if it is a necessity, then it is better to buy it on loan rather than waiting to save enough money to buy one. 
— Neelima Bhate, CA