Credit cards are steadily losing their position as the default unsecured borrowing product in India, according to a new whitepaper from TransUnion CIBIL titled 'Beyond the Swipe'. The share of open credit cards within India's overall unsecured credit products has fallen from 56% in 2016 to just 38% in 2026. Over the same period, small personal loans of ₹50,000 or less have steadily gained share, as consumers increasingly opt for these alternatives. Card issuers are now "increasingly competing with small-ticket personal loans — loans below ₹50,000 — and consumer durable loans for lifestyle financing by consumers," as noted by TransUnion CIBIL. Card balances as a proportion of total consumption-credit balances in the industry have stayed flat at around 15-16%, meaning cards aren't even holding their ground in rupee terms as the overall consumption-credit pie grows. As the report notes, 'Cards are now increasingly competing within the same consumption-driven small credit space, rather than operating as a default option'. This shift represents a fundamental change in how consumers approach unsecured borrowing, moving away from traditional credit card usage toward more diversified financial products.
Despite market share decline, outstanding card balances grew 8.3x over the decade, from ₹0.4 lakh crore to ₹3.1 lakh crore (a 24% CAGR), while live cards grew 5.1x to 10.7 crore and the cardholder base grew 3.6x to 5.2 crore. However, delinquency data shows a concerning deterioration since 2022, with delinquency levels in the 180 days past due (dpd) category rising from 5.8% to 8.1% in March 2026. The report segments cardholders into four behavioral personas, with High Exposure Users showing the highest delinquency at 5.3% compared to just 0.6% for Occasional Card Users. Among Occasional Card Users, who use cards mainly for payments and rewards, just 4% missed two or more payments across products in a 12-month period, while Card-Centric Users saw 11% miss multiple payments, translating to 2.2% card delinquency. Diversified Credit Users, who mix cards with personal and consumer durable loans, hit 15% missed-payment incidence and 4.7% card delinquency. The report notes that "delinquency worsens as highly leveraged borrowers gain more credit experience," with "diversified credit users with 4+ years of card experience having 40-60 bps higher delinquencies than the overall delinquency for the persona."
Consumers with four-plus years of card experience who had opened three or more personal loans in the prior 24 months were especially exposed, with delinquency reaching 3.6% among Diversified Credit Users and 8.7% among High Exposure Users. The share of consumers holding other consumption-led credit products alongside a credit card has doubled from 16% to 32% over the past decade, while the share of consumers who hold a credit card as their only unsecured product has fallen from 50% to 33%. The share of consumers holding three or more credit cards has also nearly doubled, from 12% to 22%. TransUnion CIBIL reports that "credit card consumers are more likely to hold multiple credit cards and multiple unsecured products in their wallet as compared to the last decade," creating "distinct growth and risk opportunities for card issuers to manage effectively." This data reveals a clear trend toward financial diversification, with consumers increasingly using multiple credit products rather than relying solely on credit cards for their borrowing needs. The report highlights that "Gen Z consumers (born between 1995 and 2010) opened new unsecured loans post first card at a higher rate compared to millennials," adding that Gen Z consumers are entering the credit card ecosystem with more existing loans than millennials did at the same age.
On the demographic front, half of new-to-credit-card consumers were aged 30 years or below as of March 2026, up from 43% in March 2022, according to the TransUnion CIBIL report. Around 46% of new-to-credit-card consumers lived in semi-urban and rural markets in March 2026, up from 42% in March 2022. However, credit card penetration remains significantly lower than global benchmarks, with India currently having 5.2 crore credit card holders out of an overall credit-active population of around 25 crore. This compares with 62% in Colombia, 70% in the UK, 81% in the USA and 98% in Hong Kong. According to TransUnion CIBIL's Managing Director and CEO Bhavesh Jain, India has 5.2 crore credit card users, which is just 25% of the overall credit active population of about 25 crore people. The number of people holding three or more credit cards in their wallet has grown to 22% from 12% a decade ago, while the average balance per user has increased to ₹65,000 from ₹31,000. More concerning, new-to-credit customers accounted for only 8% of fresh credit card additions, down from 26% a year ago, indicating that credit cards are increasingly becoming a product for existing cardholders rather than new market entrants. As per The Times of India, "Around 25% of new-to-credit-card consumers already had three or more open credit products, suggesting that for many consumers, the first credit card is being added to an existing credit wallet, and not necessarily an entry product."
