The boom in the credit card industry has a downside to it; not being able to manage the benefits of credit card leading to bankruptcy. This article looks at the emergence of credit counselling centers to assist people.

In the previous decade, credit off take in India has grown out of bounds and the growth of credit cards in the market needs a special mention. The propensity to consume now and pay later is increasing. Coupled with this, having multiple credit cards and offers to convert grocery bills into interest free EMI, which is a relatively new concept, is also becoming a common feature.

The Indian consumers can be broadly classified into four categories. The first category is the typical middle class consumer who considers borrowing a social taboo, abstains from every kind of debt and does not even own acredit card. They take every purchasing decision very carefully after having saved for the entire cost. The second segment comprises the thrifty borrower who carefully judges his Equal Monthly Installments (EMIs) within the limits, owns only one credit card and clears off all the due’s with in the due date without rolling it over to the next month’s bill. The third category is the growing segment in India, that consists of the over ambitious borrower who is struggling to payoff the multiple EMI’s due to miscalculation in taking credit and in this process, overburdens himself. This category consists of people who feel very comfortable to convert even the minimum payments into EMI’s, even if it comes with added interest. But overburdening with debt eventually leads them into a vicious debt trap and tries to keep afloat by paying the minimum payments every time. The final category consists of those who are completely confused about the new schemes and offers and require guidance in choosing a financial products for the first time, such as making a choice between a fixed rate or floating rate interest or trading off between revolving the outstanding credit on credit card and in taking a personal loan. These last two categories of consumers need assistance to plan their finances and to pull themselves out from the financial mess they are into.

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