Interview with Raj Khosla on Handling Credit for Youngsters
The trend of millennials and Gen Zs taking loans to fund their weddings is on the rise, according to Raj Khosla, Founder & MD of MyMoneyMantra. In an interview with MintGenie, he emphasized the importance of weighing the long-term financial implications before taking such a step.
Khosla advised setting a realistic budget before venturing into the unknown world of wedding loans. This helps in avoiding unwanted hefty EMI repayments and ensures that individuals stay within their achievable spending limits. He also stressed the importance of being mindful of the loan terms, comparing different options for interest rates, repayment tenure, and pre-closure penalties.
Furthermore, Khosla highlighted the need for defining future financial goals before taking on any debt. Understanding one’s future engagements, such as buying a house or starting a family, helps in making informed decisions about taking a loan.
Regarding the common trend of Gen Zs taking EMIs to buy phones and other purchases, Khosla warned about falling into a debt trap. He advised individuals to understand the borrowing costs involved in zero-interest EMIs, differentiate between needs and wants, and ensure financial stability to cover EMIs in case of emergencies.
When it comes to choosing a credit card, Khosla recommended considering factors such as fees and charges, rewards and benefits, interest rates, credit limit, and added perks. He emphasized the importance of selecting a credit card based on one’s specific needs and objectives.
In response to companies cutting down on credit card benefits, Khosla suggested cardholders reevaluate their cards, negotiate with lenders for better deals, and optimize card usage according to their unique features.
Lastly, Khosla praised secured credit cards as a tool for financial inclusion, especially for individuals with no or poor credit scores. He encouraged banks and financial institutions to promote secured credit cards more aggressively to help individuals build responsible credit habits and broaden the customer base.
