India has been a country where debit cards are more often chosen over credit cards, but in recent days there seems to be a change to this statement. Recent data from the Reserve Bank of India had shown that credit card transactions have gone up, compared to debit card transactions.
The value of transactions for credit cards, is a massive 1.3 Lakh crore, whereas 53,000 crore for debit cards. A total of 25 crore transactions using credit cards have been recorded in April this year. The mentioned transactions include both physical outlets and e-commerce.
The Unified Payment Interface or UPI is still being adopted largely in the country, credit cards have also entered this sphere of UPI. This indicates that the people in India are increasingly adaptive to using the product. Three years back in India, the total number of credit cards was only 5 crore, whereas last year it was 7.5 crore. But this year, it is a whooping number of 8.5 crores, which is indubitably a drastic change in the credit card usage of Indians.
Fashion e-commerce platforms like Myntra and other online payment apps like Paytm have launched co-branded credit cards, with Banks and Financial Institutes like Kotak Mahindra and SBI to support more credit card transactions.
Although there are perks of using a credit card like an interest-free payment period which varies from bank to bank. Bypassing the financial burden of paying huge sums of money in a very short time, Monthly instalment-based payments, and so on, there are still certain risks associated with it that have to be acknowledged.
The repayment burden strikes the customer and puts them into a compulsive state of debt. The spiking interest rates and add-on fee such as late fee or miscellaneous charges, leads to an excessive financial burden on the consumers. This eventually reaches a point where the credit card holder pays more than what they are in debt for.
But when weighing the risks and perks, certain Fintech experts around the globe suggest that the use of Credit cards is actually beneficial.
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