India has witnessed an unprecedented rise in credit card usage. By 2025, there are over 11 crore (110 million) credit card users in the country. This massive adoption spans not only the affluent but also urban and rural middle-class families, especially the youth. While credit cards offered benefits like zero-percent interest, minimal daily instalment costs (sometimes as low as ₹29 daily EMI), and easy access through Buy Now Pay Later (BNPL) schemes, these facilities have quietly morphed into a financial trap for many consumers.
The Scale of Credit Card Transactions and Debt
In 2025, the total credit card transactions in India have soared beyond ₹20 lakh crore (20 trillion rupees). The sheer volume and rapid growth of these transactions indicate how embedded credit-based consumption has become. However, this expansion also correlates with a parallel surge in Non-Performing Assets (NPAs) or bad debts—meaning people are increasingly unable to repay their dues on time, plunging into debt cycles.
Accessibility and the Debt Trap
Historically, credit cards were a privilege of only the high-income groups. But today, credit facilities including EMIs and BNPL options have become easily accessible to everyone—urban or rural, young or middle-class. This democratization of credit, while seemingly progressive, carries immense risks.
Consumers are tempted by the ease of credit with alluring taglines like “Zero percent interest,” “Lowest EMI,” and “Pay Later”, which often conceal the real cost. People often end up spending more than they can afford, lured by the convenience and deferred payment nature.
The Silent Danger: Minimum Payments and Compound Interest
Once caught in the cycle of credit card payments, many users face a dangerous pattern—when they fail to pay off their entire credit amount, they default to paying the minimum due repeatedly. Financial advisors frequently advise customers just to pay the minimum amount to maintain credit scores, but this advice can lock users into a vicious cycle.
This minimum payment, often just a small fraction of the balance, leads to compound interest charges that accumulate month on month. The user often becomes unaware or unable to grasp the extent of their liabilities growing quietly through compounding. Consequentially, the debt snowballs into an unmanageable burden.
Psychological and Social Impact on Youth and Middle-Class Families
The pressure of mounting debt is especially acute for young individuals and middle-class families in India, who initially depend on credit cards and EMIs to fulfill their dreams—whether it’s purchasing gadgets, clothes, or even funding education or weddings.
However, this easy credit leads to mental, social, and economic stress. The inability to repay and the continuous pressure from creditors induce anxiety and tension, affecting overall well-being and social relationships.
Illusion of Increased Spending Capacity
One common misconception is that people’s spending capacity has increased. The reality is that the increased spending is largely fueled by borrowed money, not increased income or savings. The facade of more disposable income is deceptive, as it is largely credit-driven, masking the growing debt under the illusion of wealth.
Recommendations and Conclusion
To mitigate this crisis, awareness is crucial. People must be educated about the true cost of credit cards and BNPL schemes. Read every fine print and evaluate if the seemingly easy payments aren’t just a trap leading to perpetual debt.
We urge caution—avoiding the temptation of quick loans and minimal payments, and instead, controlling expenses and paying credit card bills in full within due dates. The banking and financial services should also strengthen customer education and responsible lending.
The credit card crisis in India is rapidly escalating. With millions caught unaware in this web, the situation demands immediate attention from consumers, financial advisors, and regulatory bodies alike.