Case Study - On the evening of November 8th, Manpreet Kaur, a Mumbai based homemaker had settled in front of the TV to have her dinner after she had put her toddler to bed. Like always, she decided to browse some news channels before switching to her favourite daily soap. Only this time she remained fixated on the TV screen as she watched the Prime Minister declaring notes of Rs 500 and1000 illegal tender.
Her first reaction was that of panic, as her husband had just left for a business tour for three weeks and had left Rs 25,000 for her in cash to take care of household expenses while he was gone. In a state of shock and panic she had forgotten all about the secured credit card that her husband left with her, one she had barely used before. As her husband was on board an international flight for the next 16 hours, she called up her friend and neighbour Fatema, who is a financial consultant by profession.
On receiving an SOS call from her friend, Fatema rushed down to her apartment and saw Manpreet sitting with a blank expression. The first thing Fatema did was to calm her down and assure her that her wad of cash would not be rendered useless as she could deposit the old notes into her bank account till December 31st 2016. Manpreet asked Fatema how she was to go about with her day to day life without cash. Fatema asked if she had a credit card. That is when Manpreet remembered the credit card that she hardly ever used. Manpreet was wary of using a credit card because she had heard that usage of a credit card could lead to bad credit.
Fatema calmed her down that the usage of a credit card need to necessarily lead to bad credit if one were to be careful with its usage. And even then, there are several bad credit fix ideas that one could work upon. In fact, she told Manpreet that one could even avail of bad credit personal loans when in dire straits. She said she had personally come across clients who could avail of a personal loan for low CIBIL score, but that was a different story for a different day! For now she focussed on what Manpreet could use her credit card for:
Manpreet followed Fatema's advice to the T and found that using her credit card had indeed made her life a lot simpler and lighter. She also learned that by using her credit card she could:
Fatema had also thrown in a word of caution about credit card usage. She said that while a credit card is synonymous with convenience and can be used to enhance one's credit score, it may also turn into a potential debt trap if used recklessly. She reminded Manpreet that the first and foremost rule of credit card usage was that each outstanding bill must be repaid in full within each billing cycle. That was the one and only way to build and enhance CIBIL score.
Armed with this new-found knowledge and confidence, Manpreet has literally been leading a cashless life for nearly a month now. In the past week, she also left her son with Fatema and went and stood in queue to deposit her cash. While Manpreet is not very sure about the long term impact of demonetisation and cannot comprehend what it will mean for the economy a few months or years down the line, she is certainly happy and positive about the fact, that demonetisation has compelled her to go cashless that in turn makes her feel empowered and more confident today.