News Details
7th Apr, 2025

Understanding the EMI Debt Trap:

An EMI (Equated Monthly Installment) is a convenient way to pay off loans or credit purchases in manageable monthly payments. However, excessive reliance on EMIs can lead to a dangerous cycle known as the EMI Debt Trap.

The trap occurs when an individual takes on multiple loans or credit purchases with EMI payments, overestimating their ability to repay. As monthly EMIs accumulate, a significant portion of income is consumed by debt repayments. Unexpected events like a job loss or medical emergency can worsen the situation, leading to missed payments, higher interest rates, and penalties.

When people find themselves paying one EMI by taking another loan, they enter a vicious cycle of debt. Interest compounds over time, making it even harder to get out of debt. The key to avoiding the EMI debt trap is responsible financial planning: only take on debt you can afford, keep track of your EMI commitments, and create a budget that includes a safety net for emergencies.

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