Credit cards have become very popular in India. Many people are using them for the rewards, discounts on shopping and travel, easy loan options, access to airport lounges, and other benefits. But while they offer convenience, a large number of users are now struggling with “never-ending” EMI payments. As more people rely on credit cards, the number of people defaulting on their payments has also increased sharply.
According to the latest data from the Reserve Bank of India (RBI), non-performing assets (NPAs) in the credit card segment increased by 28.42% in just one year, reaching Rs 6,742 crore by December 2024. In comparison, NPAs in December 2023 were Rs 5,250 crore. This means that in just one year, there was a rise of Rs 1,500 crore in unpaid and overdue credit card bills.
The main reasons behind this increase are overspending, job loss, financial difficulties, and the very high interest rates that credit cards charge on outstanding dues. Credit card companies usually charge between 42% and 46% annual interest, which makes it very hard for people to clear their dues once they fall behind. As a result, many users fall into a debt trap—where they pay only the minimum amount due each month, but the total bill keeps growing.
To explain simply, credit card NPAs are those amounts which have not been paid for 90 days or more. If a person does not pay even the minimum due on their credit card for three months in a row, banks mark that amount as an NPA. Once this happens, the person’s credit score drops, and they have to pay even more in interest and penalties.
In December 2024, the total amount that people owed on credit cards in India was Rs 2.92 lakh crore. Out of this, Rs 6,742 crore was declared as NPAs. That means about 2.3% of all credit card loans were unpaid for 90 days or more. A year earlier, in December 2023, the NPA percentage was 2.06% when the total outstanding was Rs 2.53 lakh crore.
The problem has grown worse over the last few years. For example, in December 2020, credit card NPAs were only Rs 1,108 crore. Compared to that, the amount in December 2024 is more than five times higher. This is alarming, especially because in the same time period, the overall NPAs in the Indian banking sector have gone down—from Rs 5 lakh crore to Rs 4.55 lakh crore, according to a report by The Indian Express. So, while banks have improved in recovering loans overall, credit card defaults are going in the opposite direction.
To deal with this situation, in November 2023, the RBI increased the risk weight on consumer loans like personal loans and credit card dues. This means banks now need to keep more money aside to cover the risk of these loans not being repaid. The risk weight for such loans was raised by 25 percentage points, making it 150%. This move is meant to control the rising number of risky loans and ensure financial stability.
In simple terms, risk weight is a way to measure how risky a loan is for a bank. If the risk is high, banks must keep more backup money ready. So, lending becomes more expensive for banks, and they may become more cautious in giving out credit cards or personal loans.
A bank official, quoted by The Indian Express, said that customers need to understand how credit card debt works. If someone does not pay their full bill within the interest-free period (usually 45-50 days), the bank starts charging a very high interest rate—sometimes up to 42% per year. If people keep rolling over their dues, this interest keeps adding up, and very soon they are trapped in never-ending debt.
