The trend of credit cards is increasing rapidly in India. A credit card means a card in the hands of the user, with which he can take anything on credit from anywhere in the market. About 45 days is given for payment. Cashback and rewards are available on timely payment, but what is the benefit of banks from this? This question must be coming to your mind too. Let’s take a look at this.
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According to RBI data, more than 11 crore credit cards have been issued in the country by the beginning of 2025. This growth is based on a profitable business model for banks, which earns profits from interest rates, and charges received from businesses. Credit cards are not only a stable source of income for banks, but it is also a means of increasing the number of customers and encouraging consumer spending.
How do banks earn from credit cards?
Banks earn from credit cards in many ways. For example, if you do not pay the bill on time, the banks charge you a high interest rate. Apart from this, annual fees, card re-issuance fees, and interchange fees charged to merchants are also the main sources of income for banks. Interchange fees are the amount that the merchant pays to the bank on every transaction. This is the reason why banks in India are working to spread credit cards rapidly.
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In January 2025, credit card spending in India grew 10.8 percent to Rs 1.84 trillion (Rs 1,84,000 crore), although it was slightly lower than the previous month.
How do credit cards attract users?
Credit cards offer many benefits to users, such as reward schemes, cashback, discounts on travel, and a chance to build a credit score. Nowadays many Indians are building their credit history using credit cards, which is necessary for taking loans in the future. If you pay the bill regularly, it improves your creditworthiness.
Reward schemes such as cashback and loyalty points encourage customers to spend again and again. However, with the increasing cases of credit card misuse, RBI and banks are tightening their rules so that this business can run for a long time.
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Challenges and regulatory framework
With the increasing use of credit cards, banks are facing fraud and monitoring problems. RBI has issued guidelines to reduce the risk of unsecured loans like credit cards. Due to this, banks have been forced to reduce consumer loans and focus on deposit growth.
With the expansion of the Indian credit card market, banks need to strengthen their strategies so that they can move forward without risk. In 2025, fees and reward schemes are evolving rapidly, due to which customers need to manage their spending wisely.
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What should a user look for?
Credit card users should understand the business model of banks and make the right decision. The credit card portfolio of big banks like HDFC Bank, SBI, Bajaj Finance, and ICICI Bank is expanding rapidly, which shows its popularity. The growth of digital payments and fintech technologies is also transforming the industry.
Banks are investing in technology to improve customer experience and security, making credit cards attractive to more people. Bank-fintech partnerships are also on the rise, offering more convenient services to customers.
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Finally, it is important to consult certified financial advisors to understand your financial goals before using a credit card. This will help you understand loan products better.
