Swipe, spend, repeat: India’s growing love affair with credit cards

Despite mounting household debts, simplified paperwork fuels boom

India's central bank, the Reserve Bank of India (RBI), recently reported that consistent expansion of credit card portfolios by major banks has led to a 10.8 pc rise in spending in January 2025, reaching INR 1.84 trillion. Bankers attribute the surge to simplified paperwork, easy access to credit and changing consumer spending patterns.

In January, India’s central bank, the Reserve Bank of India (RBI), revealed that credit card spends grew by 10.8 pc in January 2025, to INR 1.84 trillion, adding that the country’s major banks have consistently expanded their credit card portfolios over the years, now accounting for nearly 90 pc of all new cards issued.

This sustained dominance by banks such as HDFC bank, SBI cards, and ICICI bank has continued to shape the dynamics of India’s growing credit card market.

RBI says that while there was a marginal decline of 12 pc from 16 pc from previous year , this annual growth trend remains intact, driven primarily by leading private and public sector banks.

According to the report, ICICI Bank led the surge in card usage, reflecting an industry-wide trend towards increased reliance on credit cards. The total number of credit cards in circulation rose by 9.5 pc, reaching 108.9 million.

Industry estimates further reveal that around 820,000 new credit cards were issued in January alone, with HDFC Bank leading by issuing 300,000 new cards, followed by SBI Cards with 240,000 and ICICI Bank with 180,000 cards.

Regarding spending, HDFC Bank remained the leading card issuer, with spending rising to 15.91 pc, which stood at INR 506.64 billion. ICICI Bank registered the highest growth rate, clocking a 20.25 pc rise to INR 356.82 billion.

This data underscores the growing preference for credit cards among Indian consumers, reflecting evolving spending habits, increased comfort with digital payments, and broader changes in the consumption landscape.

 What makes Indians opt for credit cards?

According to banking professionals, a combination of factors has contributed to the sustained rise in credit card issuance across India.

Rohit Khullar, a senior official at a private bank in Delhi’s Vasant Kunj, attributes the trend to the ease and flexibility that credit cards offer.

“There is hardly any paperwork involved, with minimal eligibility criteria. It is very easy to spend, as banks provide up to 50 days of interest-free credit on transactions. Even small-ticket spends are encouraged, with banks offering considerable leeway. Credit card usage is rising, especially among youngsters who are consuming more and more. Most of them are following a ‘buy now, pay later’ pattern,” Khullar tells Media India Group.

 Neeraj Kumar, National Head of a small bank at South Extension in Delhi, points to rising competition and changing consumer profiles as other significant contributors.

“The competition among credit card issuing banks and the increasing income levels of the Indian middle class have all been key factors behind the growing usage of credit cards,” Kumar tells Media India Group.

Meanwhile, data from the Reserve Bank of India (RBI) shows that the number of credit cards in circulation has more than doubled over the past five years, up from 55.3 million in December 2019.

According to experts, the increasing digitalisation of financial transactions has made credit cards a more convenient and preferred mode of payment for consumers. Additionally, the steady expansion of merchant acquiring infrastructure, both online and offline, has further encouraged the use of credit cards across a wider range of transactions.

Prevalence of credit cards in India

Since the late 1980s, when public sector banks such as the Central Bank of India began promoting Visa cards, credit cards have gradually become an integral part of India’s financial ecosystem.

Over the years, their relevance has only grown. According to news reports, the number of credit cards issued in India has surged five-fold in 13 years, from about 20 million in 2011.

Kumar attributes this growth to multiple post-pandemic developments, which include the rapid rise in UPI-based payments, the increasing linkage of credit cards to online platforms, and the booming digital sales and services ecosystem. These, according to him, have significantly boosted credit card penetration across India.

“The significant rise in the use of UPI payments, card linkage, and growing online digital sales and services across apps and digital portals after the Covid-19 pandemic has made credit cards more prevalent,” adds Kumar.

Moreover, features such as reward programmes and discounts have helped credit cards gain broader acceptance among users.

For Mayur Sanghvi, who has been using credit cards for over 18 years, it is the reliability and additional benefits that make them indispensable.

“The backup credit facility acts as a fallback during emergencies. Additionally, card features offering rewards and discounts are some of the reasons is why I use credit cards,” Sanghvi tells Media India Group.

A debt trap

Despite the rapid growth in credit card usage over the past few years, several challenges continue to hinder their adoption and usage. According to Khullar, high interest rates and the risk of falling into a debt trap remain major concerns for users.

“Not all cards are currently linked to UPI. In cases of impulsive shopping and spending, there are high chances of landing into a debt trap. The high cost of interest, if dues are not completely paid off, can be a serious burden. Also, users can easily fall prey to online frauds,” Khullar tells Media India Group.

Adding to these concerns, CRIF High Mark data reveals a sharp rise in credit card delinquencies. Repayments in the 91-180 days past due (DPD) category have increased by 110 basis points, reaching 7.6 pc in June 2024, compared to 6.5 pc in June 2023.

Similarly, TransUnion CIBIL data shows that credit card defaults have inched up to 1.8 pc as of June, from 1.7 pc six months ago and 1.6 pc in March 2023. While these percentage increases may appear small, the total outstanding credit card dues have surged significantly, signalling rising debt pressure.

This growing financial burden has had severe consequences. On the outskirts of Telangana’s Hyderabad, a couple died by suicide on February 18, 2024, as they were struggling to repay their bank loan and credit card debts, which amounted to INR 1.2 million and INR 0.3 million, respectively.

Additionally, almost all credit cards carry hidden costs, and users are often exposed to risks such as stolen or compromised card details, which can lead to unauthorised purchases or even identity theft.

Moreover, the ease and convenience of spending often result in impulsive purchases, with many users losing track of their actual spending. This, in turn, can easily push users into a difficult-to-manage debt cycle.

Meanwhile, in 2025, Indian credit card users are facing additional limitations as several major banks, including Axis bank, HDFC bank SBI, and YES bank, have revised their credit card offerings. The changes include higher fees, restricted reward programmes, and stricter spending conditions, especially for premium benefits such as airport lounge access, making it tougher for users to fully capitalise on card privileges.