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How Fintech players are changing the way credit is perceived in India

Many credit phobic persons pay for newspaper, domestic help, milk etc at the end of every month, oblivious of the fact that they are availing the goods and services on credit.

How Fintech players are changing the way credit is perceived in India
The users need to be careful that the amount they spend on credit cards or through other credit instruments, should not exceed their paying capacity.

When asked if they use credit cards, many people in India – especially those who are 40-year old or older – would say, “We don’t survive on borrowings.”

However, the same persons would pay their newspaper delivery men, maid servants, milkmen etc at the end of every month, oblivious of the fact that they read the newspaper and avail the services of the maid servants, drink milk etc on credit every month.

Similarly, a credit card allows a user to buy goods and services on credit, payment for which is made at a later date – usually a fixed date every month following the end of every credit cycle – called the due date.

If the entire credit card bill is paid within the due date, the users don’t have to pay any interest on the amount spent through credit cards. So, the users need to be careful that the amount they spend on credit cards or through other credit instruments, should not exceed their paying capacity.

The perception towards credit, however, is changing fast with hosts of innovative Fintech companies offering attractive products that, if used judiciously, would make one’s life easier.

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Moreover, with the tech-savvy younger generation lapping up such products, ‘credit’ is fast becoming an acceptable word in India.

As a result, more and more people now don’t hesitate in buying products using the innovative credit instruments, instead of solely relying on their savings.

“The perception around credit has changed tremendously over the years in India. While most Indian families relied on savings for big household purchases, they were averse to the idea of credit. However, things have changed with millennials acquiring purchasing power,” said Raghuvir Gakhar, CEO, PC Financial.

“With the advent of technology and options of easy EMIs, credit card payment options, credit is perceived completely differently today if compared to the early 2000s. Today the new-age financial revolution driven by FinTech players is focusing on the changing trends in consumer credit,” he added.

“An increasing number of people are applying for credit online through their mobile phones now. Hence, FinTech firms are leading the trend of availability and accessibility to unsecured credit, which will unlock the true potential of the average Indian consumer,” Gakhar further said.

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