Credit Card Tool or Trap | The Final Verdict
- Lokesh Tiwari
- April 15, 2025
Let’s cut through the noise: a credit card may look like a smart financial tool, but in reality, it’s like keeping a pile of borrowed money on your kitchen table. It sits there quietly, harmless—until the moment you use it. That’s when the trap begins.
Imagine telling a child there’s a piece of chocolate on the table, but they can’t eat it. How long do you think they’ll resist?
That’s exactly what a credit card is for most people—financial temptation within arm’s reach.
First, Understand: Cheap Money vs Costly Money (good Credit vs Bad Credit)
Would you work 24 hours a day for just ₹1?
Absolutely not. That’s a bad deal.
But would you work one hour for ₹5,000?
Maybe. Because the return is worth your time. It’s a fair deal.
The same logic applies to money.
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If a bank offers you money at 1% annual interest, you’d probably take it—because you can invest it somewhere like a fixed deposit at 6%, earning an extra 5%. That’s cheap money.
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But if a bank offers you money at 20% interest, would you still take it?
Probably not. Why? Because finding an investment that gives more than 20% consistently is extremely difficult.
Now consider this: credit card interest often ranges from 35% to 40% annually if you don’t pay on time. That’s not just costly—that’s dangerous money.
Let’s Talk Numbers – ROE of India’s Top Companies (as of April 2025)
Return on Equity (ROE) tells us how much profit a company generates with the money shareholders invest. It’s a good benchmark of what’s realistically possible with money.
Here’s the ROE of some top companies:
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Reliance – ~15%
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Asian Paints – ~25%
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TCS – ~30%
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HDFC Bank – ~20%
These giants—with expert teams, massive infrastructure, and decades of experience—generate 15–30% returns yearly.
So ask yourself:
If even Ambani earns 15% annually on his investments, do you really believe you can consistently earn more than 35% just to pay off your credit card?
The Bitter Truth About Credit Cards
Credit cards aren’t designed to help you grow—they’re designed to help you consume more.
They look like financial freedom, but they’re actually consumption traps in disguise. The more you use them for non-essential purchases, the more you delay your journey to wealth creation.
Most people don’t use credit cards for smart leverage—they use them to buy more things they don’t need. That’s the real issue.
Don’t Fall for the Gimmicks
Sure, reward points, cashback offers, and coupon codes are nice perks.
But if they’re the reason you’re getting a credit card, you’re already walking into the trap.
Those benefits are like sugar on a poison pill. Sweet to taste, but costly in the long run.
My Personal Credit Card Rule
Do I use a credit card? Yes, but with strict limitations.
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I use it only to recharge Facebook Ads and pay for international business tools.
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Outside of that, I avoid using it 100%.
Why? Because I understand the game. I don’t want my consumption habits to derail my financial goals.
Final Words
A credit card isn’t inherently good or bad—it’s a powerful but dangerous tool. Think of it like rat poison: in the hands of a responsible adult, it can be used effectively to solve a problem. But in the hands of a child, it becomes a serious risk.
Most people using credit cards are like children when it comes to financial literacy—unaware of the risks, unaware of the consequences.
Using a credit card productively is not impossible—but it’s rare and incredibly difficult. It requires discipline, awareness, and a clear financial strategy. Without that, it’s easy to fall into a cycle of debt and consumption.
Don’t let flashy perks fool you. it’s a debt trap. Always ask: Am I using this card to grow, or just to consume?
If it’s the latter—maybe it’s time to rethink.
Want a step-by-step guide to start your debt free journey?
Just type on WhatsApp “Freedom” at 9619514522
Lokesh Tiwari
Lokesh Tiwari is the Personal Finance Mentor.
We rescue people from financial mismanagement. Through our mentorship, people start their financial freedom journey by learning about investment and wealth creation.
