Using credit cards and availing loans is a part of life and nobody really treats it as something that may land us in trouble. Here are some symptoms that indicate that you are in a debt trap.
Too Much Borrowing May Lead You To A Debt Trap:
You should ideally be using not more than 30% of your monthly income to service your debts. In case of good loans such as education loans and home loans, this may further be relaxed to 40%.
If most of your financial gain goes to service debt, then you have got to borrow more money to pay for your consumption. This can worsen the situation, ultimately pushing you into the debt entice.
You Are Unable To Pay Credit Card Dues:
Credit card dues are the costliest loan in most cases. If you can’t repay the bill in full, then you are nearing the debt trap. But if you are finding it troublesome to pay off credit card dues for many months, it's time to take a hard look at your finances.
No Bank Is Offering You A Loan:
This is the ultimate sign that you are in a debt trap. Banks do check your credit report before lending you cash. If they verify that you just have borrowed to the hilt, the bank won’t extend you additional credit.
That makes you scout for unorganized ways for more credit, which comes at much higher rates compared to that offered by banks.
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