In recent years, India has witnessed a significant surge in credit card usage as consumers increasingly rely on credit to finance their consumption needs. This trend is particularly prominent among younger demographics, who often use credit for non-essential purchases and opt for Equated Monthly Installments (EMIs) to manage their spending.
The allure of interest-free credit periods, cashback offers, and reward points has made credit cards a preferred payment method, leading to transaction volumes surpassing those of debit cards.
However, this rapid growth in unsecured lending has raised concerns among financial regulators. The Reserve Bank of India has cautioned lenders about the risks associated with the high growth of personal loans used primarily for consumption, emphasizing the need for careful assessment of underwriting standards and post-sanction monitoring.
As credit card usage continues to rise, it is imperative for consumers to exercise caution and financial discipline to avoid potential debt pitfalls.
