Credit-card issuers are increasingly adopting EMI-based loans, merchant offers and fee-led products to monetize card spending as traditional revolver models face profitability challenges. According to reports from The Economic Times, this strategic pivot reflects the changing nature of credit card usage, where the business is increasingly being used as a payment product rather than a borrowing product. The shift comes as interest-bearing receivables are growing more slowly than transaction volumes, creating pressure on traditional revenue streams. Axis Bank's head of credit cards, Arnika Dixit, emphasized that "over a period of time, even if core revolves moderate or balance out, we will see EMI on credit cards continue to build the ENR (ending net receivables), or the book, for the credit card business." She noted that consumer awareness around timely repayments has improved significantly, helped by multiple platforms that remind customers to pay their dues on time, which has also reduced instances of accidental revolving.
New data from Bernstein reveals a dramatic decline in revolver balances as a percentage of card spending, fundamentally altering the revenue dynamics of the credit card business. Interest-bearing card balances (revolvers) and EMI loans have fallen to about 11% of annual card spending from roughly 21% several years ago, even as card spending grew at a compound annual rate of nearly 27% between 2021-22 and 2025-26. The revolver-led credit card model is undergoing a structural disruption, with Bernstein's Pranav Gundlapalle noting that the fall in interest-earning assets as a percentage of spends is compressing margins. The report estimates that the ratio of revolver balances to card spending had fallen to about 2.8% in the June quarter from roughly 7% in 2019, signifying a sharp decline in profit generated for every rupee spent on cards.
New data from debt and loan-resolution platform Expert Panel reveals concerning trends in how borrowers are managing existing debt obligations. 40 percent of borrowers approaching the platform were using new loans or credit cards to manage their existing EMIs, highlighting a dangerous cycle where fresh borrowing becomes the primary method for repaying old debts. Another 60 percent reported that their EMIs either exceeded or were nearly equal to their total monthly family income, creating significant cash flow pressures that can lead to multiple repayment obligations. The platform's analysis shows that 31 percent of borrowers unable to repay cited job loss or salary reduction, 28 percent pointed to EMIs becoming too high relative to income, and 19 percent cited multiple loans or over-borrowing. Among borrowers who were unable to repay, medical emergencies (26%), family expenses (22%), business-related requirements (18%), and household needs (15%) were the primary reasons for taking additional loans.
According to Expert Panel's analysis, medical emergencies (26%), family expenses (22%), business-related requirements (18%), and household needs (15%) were the primary reasons borrowers took additional loans. Among borrowers who were unable to repay, 31 percent cited job loss or salary reduction, 28 percent pointed to EMIs becoming too high relative to income, and 19 percent cited multiple loans or over-borrowing. The platform reports that 39 percent experienced recovery calls or abusive language, 28 percent faced frequent calls from multiple lenders, 11 percent reported home or workplace visits, and 8 percent faced threats of legal action. As Anurag Mehra from Expert Panel notes, borrowers need to consider their existing EMI commitments and total borrowing costs before adding another loan. Financial experts generally advise borrowers to assess their entire monthly debt obligation rather than looking only at the EMI on a new loan, adding existing personal-loan EMIs, credit-card dues, BNPL payments and the proposed new EMI before making festive season borrowing decisions.
Financial experts are raising concerns about the growing use of loans for discretionary spending, particularly among younger borrowers. Pankaj Mathpal, founder of Optima Money Managers, emphasized that while borrowing for essential needs like homes, vehicles or education is not new, the concern lies in the growing use of loans for smartphones, travel and other purchases that may not be essential. Praveen Vepayee noted that the problem becomes difficult to spot when borrowers take several small loans, as an EMI of ₹4,000 may not appear large on its own, but several such payments can add up to a significant monthly burden. Experts warn that a missed payment can further increase the problem through penalties and a possible impact on the borrower's credit score. They stress that responsible borrowing is important, with access to credit not meaning the entire available limit should be used, and borrowers should take only what they need and can repay without putting regular finances under pressure.
