Credit Card works like chilli , when used in the right amount , it enhances the taste. Used recklessly, it leaves you frantically looking for water . Only after gasping for relief , you begin to realize what amount is right for you ,same works for credit , a single notification of 18 % interest for late payment of dues would make you go right back on track . For middle class Indians with limited cash flow , even paying a penalty would make a noticeable dent in their savings and investment .

But what is in the credit card that makes you realize too late about your grave mistake that you unknowingly make . The ease with which credit card is available to everyone underestimates the liability it brings along with its use case . Gone are the days when credit cards were a luxury only provided to the chosen ones , right now they are being distributed like toffees .

Credit card can easily hypnotize the middle class families because they are the group with least awareness about how it works , all they know is they can pay the due 45 days later . Over here we will discuss how middle class Indians fall for the trap set by credit card companies repeatedly .

• Makes You Feel Richer Than You Actually Are

The credit of ₹50,000 that you get with the card can hype you up, making you feel richer by 50k that you never actually had. This ₹50,000 is marketed in such a way that it is yours but in reality, you are actually borrowing it.

The borrowed money slowly feels like owned money. For a middle-class Indian, having credit card is like a blessing since not all of them can afford to purchase items worth 50k at once.

So, this card brings a sense of freedom allowing them to indulge in luxury with the advantage of delayed payment. When the due date of payment arrives, they pay the debt back using another credit card trapping themselves in a vicious cycle of debt.

The easy accessibility of credit card has made it mainstream. Anyone irrespective of his income can afford a lifetime free credit card to make a minimum ₹50,000 purchase. As on May.26, Indians own around 12 crore credit cards which is 33.7 % surge YoY & 26.9% surge MoM.

Also check out : 6 Mistakes Middle-Class Indians Must Avoid Before Buying a Car

• Delayed Payment Makes You Feel Like Your Money Is Still There

You go to a mall and splurge on a front-loading washing machine worth 30k. You pay it via a credit card. The due date of payment is fixed to next month. 15 days go by and you realize that you want a 1.5 tonne AC for your home, since you have maxxed out your credit limit. You check your savings account and find out that you still have 25k in there.

You feel so ecstatic because you still have surplus cash with you after maxing out the credit card limit. But soon as the card payment due date arrives, you realize that you don’t have enough funds to pay back the borrowed money. This false sense of buying power leads you to a financial contingency.

In FY24-25 , the default on credit cards rose to ₹6,778 crore against ₹4,072 crore in FY22-23 ,this is 66% increase in credit card default in past 2 years .

• Removes the Friction of Spending

Now, enters the UPI – linked credit card that allows you to pay by just scanning QR code at any shop without any card swiping machine. From a 1-rupee toffee to 200 rupees worth vegetables from a hawker could be paid using the UPI linked credit card. This removed the physical card from the picture.

Earlier you had to plan your credit card expense from your home before reaching a shop, but this revolution allows the people to make impromptu purchases using credit card. This frictionless money lending scheme has removed the blurred line separating owned money and borrowed money.

As per recent report, in FY25-26 RuPay credit card-based UPI transaction represents more than 40% of the digital transaction volume. Also, RuPay credit card presence has also grown to 16% which was only 3% over 2 years back.

• Rewards and Cashback Encourage You to Spend More

Buying something because it offers a reward will often outweigh buying something because you genuinely need it. This conundrum leads to overspending sometimes exceeding your purchasing limit.

Buying a 1000 rupees bag over a 500 rupees bag just because you are getting a free movie ticket over that purchase will not only clutter your wardrobe but also declutter your savings account.

Offering you things you were never wanted but just because it was coming free due to an offer suddenly becomes enticing for you.

Offers and discounts are slowly taking over use case and requirements. During Diwali period in 2025, 42% of Indians credit card users spent over 50k using their cards driven largely by festival period offers and discounts.

Also check out : 7 Reasons Why Middle Class Indians Don’t Have an Emergency Fund

• Annual Fee Waiver Pushes You to Spend More

Ravi got a premium credit card with ₹2,000 rupees annual fees which can be waived off only if he purchases items worth ₹2 lakh in a year via the card. But he spent 1.9 lakhs, ₹10,000 short of getting his fees waived. He got himself a 12k smart watch, the countdown was ticking and he had no better option in this price range.

He got the fees waived off but ended up with a smart watch which he already had on his wrist and paying 2k additional upfront. This way his additional expenditure exceeded the benefits. The middle class urge to avail themselves of the benefits stops them from accounting the amount spent to achieve it.

• Normalizes Living on Borrowed Money

The ready availability of credit cards has normalized borrowing as a part of everyday life. The schemes like BNPL (Buy Now Pay Later) and EMI have made it easier for the middle-class Indians to buy expensive things via credit card.

Credit card companies know that very few Indians can afford to pay 50k at once hence they created Low cost/no cost EMI for the consumers to borrow money from credit card companies .

Once the consumer fail to pay the EMIs , the same companies offer them easily available high interest personal loans to complete the EMIs. So , loan and borrowing gets concealed as “owned money” and is given to the consumer showcasing how easily it is to borrow capital in India .

A recent survey has reported that 93% of Indians earning salary below 50k per month have increased their reliance on credit cards and BNPL schemes to make ends meet.

• Encourages Lifestyle Inflation

Mobile phones in India are literally a status symbol; you are thoroughly judged based on your phone. This is why even a person barely earning 15k per month also owns an iPhone. Even though an iPhone 17 costs over 1 lakh rupees but credit card companies have made it easy for the people to own it through Low cost/No cost EMIs and other offers. 70% of all iPhones sold in India is done through EMI option.

Credit card companies know that a person earning 15k per month cannot afford to pay the entire cost of an iPhone upfront, hence they entice him to buy in deferred payments over many months. This easily available credit has led to increase in lifestyle inflation even though the person cannot afford it at once.

These same daily wagers are also upgrading on the models if iPhone releases it. While the features remain almost similar, but the status is enhanced multifold if you own an updated iPhone model which is trending in the market.

Conclusion

Credit card may be a tool of convenience, but it may also wipe out your savings conveniently. It is a tool which packages borrowed money to feel like your own. Only when you understand its true nature, you may be able to control your expenses. The real risk here is not the penalty but the illusion that you are richer than you actually are.

Before making any purchase with a credit card, always ask yourself

“Would I still buy this thing if I had the ability to pay for it entirely in cash?”

If your answer is “Yes”, then you can use the credit card, if “No” then you are better off not using it.