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Avoid excessive borrowing

A woman talking on the phone; image used for HSBC India Avoid excessive borrowing article

If you have debt, then you are not alone.

Although household debt may be relatively low, it's still possible to develop unhealthy financial habits. For example, using a credit card for emergency and unforeseen costs, even if you live in a higher income household.

What counts as excessive borrowing?

Excessive borrowing is any amount of debt that you can't comfortably manage. There are several signs to look out for:

  1. Borrowing to cover everyday expenses
    One of the first signs that you may have a debt problem is if you need to borrow money to cover everyday expenses, like utility bills, food or travel costs. Rather than take out a short-term or payday loan, it may be helpful to admit that your budget is overstretched, and take steps to reduce your spends.
  2. Repeated borrowing
    Borrowing money repeatedly, and on a regular basis, is another sign that you may have a debt problem. It's a good idea to set yourself a budget, if you don't have one already, so that you can plan ahead.
  3. Minimum payments only
    If you have more than one credit card, and can only afford to make the minimum required payment on each, this may be another sign of excessive borrowing.
  4. Cash advances
    Using cash advances from credit cards to pay bills might seem like a manageable solution, but it's another sign that you may have borrowed more money than you can comfortably afford to pay back.

It may be difficult to avoid excessive borrowing if you're already struggling to meet your monthly spends. If it feels like your debt is getting out of control, you should consider seeking specialist help.

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