Credit card use is soaring—and so is the risk of debt traps: stay wary

Early warning signs of a debt trap include rolling balances, juggling cards and using credit for daily expenses

- Ayneet Kaur

India’s credit card boom is reshaping household finances—boosting spending power for some while pushing others toward costly debt traps.

Over the past five years, credit card issuance grew at nearly 20% annually. Active cards doubled from 55 million in FY20 to 111 million in FY25, while outstanding balances ballooned from ₹30,500 crore in FY15 to ₹2.9 trillion by FY25, according to RBI data. The surge in cards and outstanding dues raises a question: are more Indians slipping into a credit card debt trap? Balances per card have risen sharply—from ₹1,600 in FY15 to nearly ₹25,700 in FY25—signalling higher credit use. For those caught in a trap, is there a way out? Experts say yes.

Usage vs intent

The real issue, experts argue, is not the rise in credit card usage, but the purpose for which cards are being used. “While rising credit card usage reflects both expanding financial access and growing consumer confidence, the intent behind spending matters more than the volume,” Yashoraj Tyagi, chief executive, CASHe, an online lending platform, said.

“When usage grows at a faster clip and financial literacy doesn’t keep up with that pace, credit stops being just a convenience tool and becomes a survival tool,” Bhuvanaa Shreeram, co-founder of House of Alpha Investment Advisers, a Sebi-registered investment advisory firm, said.

Rising delinquencies suggest that for a segment of borrowers, cards are not just financing convenience purchases—they are also plugging cash-flow gaps. And that, she believes, is the real problem.

Household stress