New Delhi — Credit card usage in India is surging like never before, but with it comes a growing concern over high interest debt and financial stress for many consumers. As of January 2025 the number of credit cards issued by banks had jumped to 10.88 crore a sharp rise from 9.95 crore a year earlier and 6.10 crore in January 2021 according to the Reserve Bank of India (RBI).
Spending through credit cards has also hit new highs. Total transaction value tripled in just three years from ₹6.30 lakh crore in the year ending March 2021 to a massive ₹18.31 lakh crore by March 2024. In January 2025 alone, credit card transactions stood at ₹1.84 lakh crore, up nearly three times from ₹64,737 crore in January 2021.
What’s driving this boom? Industry experts say consumers are lured by attractive incentives such as reward points for higher spending, easy loan offers and access to airport lounges all of which make credit cards appealing for everyday use.
However, the growing reliance on credit cards comes with a warning. Credit card dues are unsecured and carry some of the highest interest rates in the financial system, ranging from 42% to 46% per annum. When a customer misses payments beyond the interest-free grace period, they face not just high penalties but also a sharp drop in their credit score.
Bank official cautioned “Customers should realise that if they keep card dues beyond the interest-free period, they end up paying an interest rate of up to 42 per cent in some cases. It will put them in a debt trap”.
Card outstanding refers to the amount a customer owes after the interest-free window. If repayment is delayed by over 90 days, the account is marked as a Non-Performing Asset (NPA), meaning the bank may struggle to recover the money.
In a move to reduce growing financial risks, the RBI in November 2023 raised the risk weight on bank exposures to credit card receivables, consumer credit, and NBFCs by 25%, bringing the total risk weight to 150%. This essentially means banks are now required to set aside more capital for such loans, making credit less freely available.
RBI noted in its Financial Stability Report “Even as inquiry volumes remain robust, the impact of increase in risk weights on certain segments of consumer credit pulled down the rate of growth in overall consumer credit, especially personal loans and credit cards”.
With the post-pandemic recovery boosting consumer confidence, spending is rising steadily. But financial advisors warn that users must be mindful of the potential debt risks. Credit cards can be a powerful tool if used wisely but once dues pile up beyond control, the financial burden can be overwhelming.
As the credit card culture deepens in India, both regulators and banks are urging users to stay aware pay on time, and avoid the high-interest trap.
