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Has the borrowing age been reduced?

According to a report by Paisa Bazaar, which analyzed the credit behavior of over 10 million consumers, the average age of first-time borrowers has declined across generations. 'Generation Z' is now using credit cards, 'Buy Now Pay Later' and personal loans extensively. One of the main reasons for this is the ease of access to credit. EMI and 'Pay Later' facilities are available on shopping or payment apps. This means that often the question is not whether you have the money; You just need to check the EMI amount.

Why are young people taking on so much debt?

Loans are not only for housing, education or medical needs. Expenses like travel, gadgets, fashion, food and entertainment are also being paid with credit cards. Buy Now Pay Later facility allows customers to pay for goods or services later. It's tempting to buy quickly in smaller installments, but sometimes the combined installments of multiple purchases add up to a huge financial burden. If someone earns ₹40,000 and uses a credit card for a phone, clothes or a trip, each expense may seem small, but at the end of the month many installments must be paid at once.

So what should be done?

There's nothing wrong with using a credit card or 'buy now, pay later', but your credit limit is not your income. Just because the bank has given you a limit of ₹1 lakh, it doesn't mean you can spend another ₹1 lakh. Plus, if you don't pay on time, interest and late fees may apply. So, instead of buying just by looking at the EMI, check the total repayment amount and all charges.

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