Very soon, Suresh had to move from one credit card to another — Citibank, American Express, Stanchart — when the old card wouldn’t cough up the much-needed credit. Suresh entered into a new pattern of life, that of a credit card or ‘plastic’ junky. Once a card was full, he took another from a different bank or company, and then yet another — going from limit to limit, card to card and, of course, in the process becoming thick-skinned or shameless.

Fortunately for him, he woke up in time to rid himself this addiction. He realised how in the pursuit of a false sense of status and honour, he had almost landed himself in a situation from where it was difficult to come out unscathed. "I was daft not to have realised that interest is calculated at 2.5 per cent a month on the loan I was taking", he recalls.

Suresh has since paid back every penny but he has lost his credibility with the banks. "Had I paid back 70 per cent of my loans I’d taken each month, I’d have kept going and retained my credibility. Now I know how to use the credit card wisely but I can. No bank will give me a card easily now".

But then there are people like Jyoti Seth who know how to use loans wisely. He went in for one recently and bought a house in a posh colony in Delhi. Seth will spend the next decade or so paying bank the loan money and interest. "If I can enjoy living in a fine house while I’m working, the loan is worth it," says he. Seth is not bothered about the fact that a significant part of his salary will go into paying the monthly instalments." One reason for this is the quantum of instalment he is required to pay. It just works out to be 40 per cent of his take-home salary. "By the time I end up paying the instalments, the value of my house would have trebled. On top of it, I would have saved on paying the monthly rent," adds Seth.

It is the middle class that is going in for credit cards or bank loans in a big way. The reason: they are status conscious. This is reflected by the brand names they possess — from their clothes and footwear to their house. "Having expensive things which are magnificent, new and fashionable makes a statement about the person," opines R.K. Singh, a professor in sociology in Delhi.

The middle class is shrewd. They have understood a basic point — there is only a marginal financial difference between saving for many years for a big purchase and buying it immediately on loan or credit. "With this marginal difference (in mind), people prefer to have their comfort now rather than later," says Sunil Shah, a chartered accountant in Delhi.

With housing shortage on the one hand, and spiralling house rents on the other, housing loans are in great demand. For banks they are the safety bet too. Next come loans to finance higher education of children abroad. This too is a status symbol.

Besides, a foreign degree enhances the chances of getting a job for their son or daughter in multinational companies (MNCs) within and outside India.

With globalisation or the opening of the economy, it is consumerism that has caught the fancy of the people. The middle class wants to have the best of the present time with a sharp eye on the future. Add to it, the easy availability of credit from private banks and the competition among them to hook as many loan takers as possible.

For the middle class, it is all too good to be believed. So they are going in for buying status by splurging in the new-found credit.

There is nothing wrong in this as long as the loan-taking is done wisely. Never go beyond the 30 per cent mark on your pay for loan repayments. Also, be firm on paying the monthly instalments in time as the interest adds to a hefty 35 to 48 per cent a year on the outstanding dues.

By paying back regularly, you maintain a good rating with the credit card companies or banks. This helps in raising emergency short-term loans whenever needed.

In addition, try to learn the ‘tricks of the trade’, as the saying goes. Do your homework, before talking to finance companies. Make a survey and decide which finance scheme suits you best. Astute loan takers play one company against another to get the best deal, especially in the case of loans for motor vehicles.

One principal reason behind this mad rush for taking loans is a change in the mindset of the middle class. On the one hand, are buying goods, property and opportunity for better education of their kids. On the other hand, the housewife continues to save a bit of money every month out of sheer habit.

The middle class has realised that keeping idle money is no good. You need to invest it wisely — in buying a house, flat, car, etc — but not in a dormant asset like jewellery as in the past. This attitudinal change is behind this spurt in consumerism — the new god of the middle class.