How a Credit card pandemic is gripping India

India is experiencing a surge in credit card usage, but it's a double-edged sword. Here's a breakdown:

The Boom:

Sharp Rise in Numbers: The number of active credit cards has nearly doubled in the last four years, 

jumping from 5.5 crore in December 2019 to almost 10 crore (as of January 2024). 

This signifies a significant increase in credit card adoption.

Increased Spending: Credit card spending is hitting record highs. 

The ease of cashless transactions and possibly increased disposable income are contributing factors.

The Worrying Side:

Defaults are Climbing: With more people using credit cards, defaults are also rising. 

In 2022-23, defaults were over Rs 950 crore higher than the previous year. 

This has caught the attention of the Reserve Bank of India (RBI).

Possible reasons for the rise in defaults:

People might be spending beyond their means, especially with easy credit availability.

Lack of financial literacy around credit card usage and interest rates could be leading to debt traps.

The RBI is monitoring the situation and might take steps to regulate credit card issuance or promote financial education.