On the โCredit Cards Indiaโ subreddit, a user writes, โLost my job, โน80k in credit card debt, no income. What are my options?โ Another says, โDrowning in credit card debt (ICICI, Axis, HDFC, Federal) โ no income, no support. Please help.โ A third asks, โStruggling with EMIs. Is foreclosure a good idea?โ These are just a few of the hundreds of desperate posts that expose the harsh reality behind Indiaโs growing financial aspirations.
Living on credit
Credit card debt is no longer a silent crisis. Last year alone, defaults in India surged 28%, touching โน6,742 crore. This sharp rise reflects not just poor budgeting or overspending, but a deeper shift: more Indians are relying on credit not for convenience, but simply to keep up. Itโs a mirror to our insecurities and aspirations.
Whether itโs a lavish wedding, the latest iPhone on EMI, or an international holiday โbecause all our friends are doing itโ, our appetite for consumption is increasingly driven by borrowed money. With โน2.9 lakh crore in dues and โน10.5 crore credit cards in use as per RBI, Indiaโs credit-driven spending is at its highest. Even UPI-linked credit card payments crossed โน63,825 crore by late 2024. The numbers show a disturbing shift โ debt is now a normal way to spend.
Whatโs fuelling the crisis?
Young Indiaโs debt spiral stems from a lack of awareness about how credit cards actually work. Theyโre being marketed to 20-somethings as a ticket to the life they think they deserve โ no caveats, no warnings. Unsurprisingly, Gen Z now makes up 41% of all first-time borrowers, according to CIBIL. As a country, weโve gone from being debt-averse to debt-optimistic, from avoiding impulse buys to swiping without a second thought, and thereโs no middle ground in sight.
Young Indiaโs debt spiral stems from a lack of awareness
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Itโs important to understand that cheap credit isnโt just filling income gaps or helping in emergencies โ itโs now shaping entire identities. An iPhone becomes a symbol of success. A vacation on EMI is seen as proof of โwork-life balanceโ. Weddings, home upgrades, and even education choices are often driven more by perception than prudence.
The true cost of credit
For many, the wake-up call isnโt dramatic โ itโs a text from the bank. Minimum due: โน12,000. Interest charged: โน3,500. Before long, the interest is more than the amount spent, since credit card rates can be 42% to 56% a year.
As someone who often talks about personal finance with people, I see that credit card debt, though common, isnโt taken seriously enough because shame and guilt keep people silent. If youโre in the red, know this, guilt wonโt help, but a plan will. The system may be built to keep you swiping, but there are ways to take back control.
Debt detox
Here are four strategies to help you break up with debt and get your money, and peace of mind, back on track.
1. Focus on getting debt-free
Credit card debt grows fast because high interest is charged not just on missed payments, but also on new spends. So, make clearing this debt your top priority, even if it means pausing your SIPs or pulling out from existing investments. Your savings, and sanity, will thank you later.
2. Avalanche or snowball?
If you have debt across multiple cards or EMIs, start by clearing the highest-interest ones first โ this โavalancheโ method makes your debt cheaper overall. The โsnowballโ method, where you pay off the smallest debts first to build momentum, can feel rewarding but may cost more in the long run.
3. Find additional income
Additional income can often be a saviour at times of financial distress. Taking on a freelance or gig role, even something as simple as teaching your neighbourโs kids algebra, can help you pay off your debts faster.
Additional income can often be a saviour
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4. Talk to your bank
It might surprise you, but your bank may help if you reach out before things get complicated. Most banks in India have hardship or collections teams that can restructure your dues, especially if you act early. You can ask for:
– Lower interest rates or a temporary freeze
– EMI conversion of your outstanding balance at a lower rate
– Waiver of late fees or penalties
– In extreme cases, a one-time โsettlementโ (note: this affects your credit score, so use it only as a last resort)
Itโs important to contact your bank as soon as possible. If your account defaults multiple times or is marked as a Non-Performing Asset (NPA), negotiating becomes much harder, and your credit score tanks.
Smart money moves
Do a debt audit: List every loan, EMI, or credit card balance you owe. Include the interest rate, monthly payment, and due date. This isnโt about shame, itโs about clarity.
Understand your triggers: Were you sad when you made that purchase? Was it FOMO, peer pressure, or guilt? Knowing how you feel when you spend is as important as knowing how much you spend. (Tip: keep a โwhy I spentโ column next to your expenses.)
Make a โnoโ budget: List what you wonโt spend on. No new gadgets till Diwali. No dining out more than twice a month. No gifts over โน500 per person. These are boundaries, not punishments.
Reframe spending as trade-offs: Instead of asking, โCan I afford this EMI?โ ask, โWhat am I giving up to afford it?โ Maybe itโs quitting a toxic job or next yearโs holiday. Spend consciously, not compulsively.
List what you wonโt spend on
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Getty Images/iStockPhoto
Financial freedom isnโt about how much we borrow. Itโs about how resilient we are when income slows, interest rates rise, or emergencies happen. As a country, we must go beyond access and talk about agency. That means clear disclosures, financial education in schools, and a culture where talking about money isnโt taboo and living within your means is seen as wisdom, not a lack of ambition.
The writer is a chartered accountant and author of personal finance book Money Doesnโt Grow On Trees.
Published – September 05, 2025 07:07 am IST