The Reason That Most Individuals Are In Debt Is Due To The Overuse As Well As Irresponsible Use Of Credit Cards | Band 7 IELTS Essay Sample
The reason that most individuals are in debt is due to the overuse as well as irresponsible use of credit cards. Banks should not issue credit cards unless they ae completely sure of an individual’s ability to pay back their debits. To what extent do you agree with this?
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Band 7 IELTS essay sample
Many individuals get into debt due to undisciplined credit card spending. I disagree with the argument that it is the sole responsibility of the banks to ensure that people do not get into debt because every bank performs an application qualifying process, and even people with good earning capacity defaults on their payment by being irresponsible on spending.
Banks perform multiple checks on credit history of the individual before approving credit card applications. Also, this is one of the important steps as per guidelines given by the country’s apex bank. To illustrate, as per RBI, a person’s credit score should be more than 750 points to qualify for credit card. These are kind of preventive ways to ensure that the banks do not have to deal with payment default.
On the other hand, people get into debt issue because of their unplanned and undisciplined credit card spending. It has become common amongst youngsters to shop by credit card vs cash and these are frequent and compulsive shopping. Also, people do not keep track on their spending. For example, as per India Today research report people spend less if they buy from cash vs credit card, this is because when people use cards they are not aware how much money they spent. And at the end of the month they have larger bill than their paycheck.
In conclusion, while banks perform several checks to ensure that payment default rates are low, there are lots of factors beyond their control that can affect the repayment capacity of an individual.
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