The Numbers Tell a Story
Recent data from the Reserve Bank of India (RBI) paints a clear picture of shifting consumer habits. Credit card spending has consistently crossed the ₹2 trillion mark per month in 2026, a significant jump from previous years. More revealingly, the number
of transactions has grown much faster than the total spending value. According to a September 2026 report, credit card transactions in July surged by over 24% year-on-year, while spending grew by a more modest 7.4%. This has caused the average transaction size to drop by about 13.5% to ₹3,460. In simple terms, Indians are using their credit cards more often, but for smaller amounts. This suggests a decisive move away from using plastic only for major purchases and towards integrating it into daily life.
What’s Driving the Daily Swipes?
Several factors are fuelling this trend. The first is the sheer convenience of contactless, or 'tap-and-pay', technology. Spurred by the pandemic and supported by an RBI-mandated limit of ₹5,000 for pin-less transactions, tapping a card is faster and simpler than handling cash or even scanning a QR code for many. Another major catalyst is the linking of credit cards, particularly RuPay cards, with the Unified Payments Interface (UPI) network. This allows users to pay small merchants via UPI, but have the amount charged to their credit line, merging the ubiquity of UPI with the benefits of credit. Furthermore, banks and fintech companies are aggressively pushing co-branded cards that offer attractive rewards, cashback, and no-cost EMI options on everything from groceries to fuel, incentivizing users to make even routine payments with their cards.
Beyond the Metros
This behavioural shift is not confined to India's major metropolitan areas. In fact, the strongest momentum for credit card growth is now coming from Tier-2 and Tier-3 cities. Having already embraced UPI as the default payment method, residents in smaller cities are now adopting credit. For this growing segment of first-time cardholders, credit is not about luxury spending but about managing consistent, daily needs like fuel, medicines, and local services. Public sector banks, with their extensive branch networks in these regions, have played a key role, showing stronger growth in card additions and helping to deepen credit penetration beyond the usual urban centres.
The Rise of a Hybrid System
Despite its growth, credit card usage still pales in comparison to UPI, which dominates the digital payments landscape, accounting for over 77% of merchant transactions. However, credit cards are not competing with UPI; they are learning to coexist and even integrate with it. While UPI remains the king of low-value, peer-to-peer payments, credit cards are carving out a niche for routine household spending where users want a credit buffer, rewards, or the ability to pay later. The rise of RuPay credit cards on UPI is the clearest example of this hybrid model, giving users the best of both worlds and contributing to the higher transaction volumes and smaller ticket sizes seen in recent data.
A Word of Caution
While the convenience is undeniable, the growing use of credit for daily needs comes with a significant caveat: the risk of debt. When small, seemingly harmless swipes for coffee or groceries accumulate, they can quickly lead to a large bill at the end of the month. The traditional Indian aversion to credit unless absolutely necessary seems to be fading, but financial discipline must not follow suit. The ease of 'buy now, pay later' can mask overspending until the statement arrives with high interest charges. Recent RBI data has already shown a rise in outstanding credit card dues, highlighting the need for users to remain vigilant about their repayment habits and use credit as a tool for convenience, not a license for unplanned expenses.
