People in India need to pay their credit card dues, which has led to an increase in overdue payments on credit cards. This rise has been steadily growing since the pandemic, which is causing financial troubles for the borrowers. Within three months, the credit card defaults rose to 1.8% in June 2024 from 1.7% in March 2024. According to the TransUnion CIBIL data, the credit card defaults were 1.6% in March 2023, showing us that even though the percentage is small, the amount of outstanding credit card dues has increased rapidly.
In March 2019, the total credit card outstanding due was ₹87,686 crore, which expanded to ₹2 lakh crore in March 2023. After one year, the outstanding balance was ₹2.6 lakh crore in March 2024, which rose to ₹2.7 lakh crore in June 2024. The compound annual growth rate has increased by 24% in the last 5 years, which is quite alarming.
Experts have observed that young millennials are using the entire credit limit and directly defaulting, turning into non-performing assets (NPAs) without even repaying the loan. The default journey often begins when people make large purchases, thinking they will repay it in installments. Due to high annual amortization rates, borrowers may only be able to make the minimum payment. This may lead them to take small personal loans to meet the minimum card payment. Experts have even pointed out that the EMI option provides credit at much lower rates compared to the roll-over rate. Unlike during the global financial crisis, there is no intentional effort to max out credit cards to default. The continuous growth in credit card defaults shows that more people are struggling with their finances.
Bottom Line
The rise in the number of people needing to pay their credit card bills on time in India is a big worry. This has worsened because, following the pandemic, an increasing number of people have failed to repay their debts. Showing that many borrowers, particularly young millennials, are experiencing financial difficulties. Depending too much on credit cards and not being able to pay them back has caused a big rise in debt and financial stress. People need to manage their money carefully and get help if they’re having trouble paying their credit card bills.