Here's why Indians prefer credit cards to debit cards after the pandemic

The pandemic pushed people indoors and led to a surge in online shopping and digital payments, even as financial uncertainty was looming. This was also an era when people were going slow on spending, and were able to pay off credit card dues, but this also created pent up demand. By the time the pandemic restrictions were lifted, India had a significantly higher number of card holders, who were ready to splurge.

Post-pandemic frenzy

As finances remained tight as the world was recovering from a pandemic, credit cards provided easy access to money and increased purchasing power. The popularity of credit cards for this reason is reflected in the data shared by the Reserve Bank of India, which shows that credit card payments went up from 6.3 lakh to more than 10 lakh in a year. At the same time, debit card payments dropped from 6.6 lakh to 5.6 lakh between FY22 and FY23.

Credit over debit

There was also a 95 per cent surge for credit card usage from December 2019 to December 2022, while debit card payments clocked a 30 per cent dip. This is because people were able to access credit quickly, pay power bills, and for subscriptions, data and other services. A larger number of Indians discovered this financial freedom, and have been making credit card purchases.

Reasons and risks

Reward points offered on swiping cards also attracted people looking for discounts, and as people started travelling more in the post-pandemic era, usage subsequently went up. The credit card market is still untapped, and with the surge in demand, banks are offering quick access to credit cards for consumers in India. But at the same time, the personal debt in India is also rising, and that could be a major concern in the longer run.