Credit card dues in India are steadily increasing, with more borrowers struggling to keep up with payments. This trend, which started during the pandemic, has worsened, leading to financial stress for many. Here’s a breakdown:
1. Growing Defaults:
- Credit card defaults rose to 1.8% in June 2024, up from 1.7% in March 2024, and 1.6% in March 2023.
- Though the percentage may seem small, the overall amount of unpaid dues has surged rapidly.
2. Rapid Growth in Outstanding Dues:
- In March 2019, outstanding credit card dues were ₹87,686 crore.
- By March 2023, this grew to ₹2 lakh crore, and by March 2024, it hit ₹2.6 lakh crore, rising to ₹2.7 lakh crore by June 2024.
- The compound annual growth rate has been 24% over the last 5 years, which is alarming.
3. Young Millennials at Risk:
- Young millennials often use their entire credit limit, and some default without repaying.
- The problem usually starts when borrowers make large purchases, expecting to repay in installments but end up making only the minimum payments due to high interest rates.
4. EMI vs Roll-over Payments:
- Experts highlight that EMIs offer credit at lower rates than the high annual roll-over rates on credit cards, which is leading many to fall into debt traps.
- Some borrowers even resort to personal loans to cover minimum payments, adding to their financial burden.
The increasing credit card defaults reflect a growing financial struggle among borrowers, raising concerns about their ability to manage debt.