India's credit card market is changing, with borrowers increasingly using credit cards alongside personal loans, consumer durable loans and other unsecured credit products, according to a report from TransUnion CIBIL. The shift is creating more complex borrowing patterns and raising fresh concerns about delinquency among customers with multiple credit products, the credit information company said.
The report,
Beyond the Swipe: How India Uses Card as a Credit Instrument, says rapid growth in retail credit has changed consumer borrowing behaviour. Credit cards are no longer used only as a payment tool or a standalone source of unsecured credit. Instead, they form part of a broader borrowing portfolio, making it more difficult for lenders to assess risk using traditional underwriting models.
According to the report, the next phase of growth in India's credit card market will depend less on issuing new cards and more on understanding how customers manage multiple credit products across different lenders.
Credit Cards Becoming Part of a Wider Credit Portfolio
The report says borrowers are increasingly optimising the use of multiple lenders, credit lines and repayment obligations, making single-product credit assessment less effective.
Based on bureau data, TransUnion CIBIL has classified cardholders into four behavioural segments:
• Occasional card users
• Card-centric users
• Diversified credit users
• High exposure users
The classification is based on factors such as credit card utilisation, available credit limits, unsecured and secured borrowings, and credit vintage.
According to the report, each group has distinct borrowing patterns, growth potential and risk profile, suggesting that a uniform lending strategy may no longer be effective.
Borrowers Increasingly Hold Multiple Unsecured Loans
The report highlights the growing overlap between credit cards and other unsecured borrowing.
Among diversified credit users, 55% also have consumer durable loans, 53% hold high-ticket personal loans and 36% have small-ticket personal loans.
Among high-exposure users, 74% have high-ticket personal loans, while 32% hold consumer durable loans and 22% have small-ticket personal loans in addition to their credit cards.
TransUnion CIBIL says these increasingly complex borrowing portfolios offer growth opportunities for lenders but also make credit risk more difficult to assess.
Delinquency Rises with Longer Credit History
The report also points to higher delinquency among borrowers with longer credit histories and greater unsecured exposure.
High Exposure Users become progressively more delinquent as their credit card vintage increases. Borrowers whose oldest credit card is more than nine years old report significantly higher delinquency than relatively new cardholders.
The report says that nearly 30% of borrowers with more than four years of card history opened three or more personal loans in the previous 24 months and recorded delinquency rates of around 3.6%.
In another group of experienced borrowers with multiple personal loans, delinquency rose to 8.7%, well above the portfolio average.
According to the report, delinquency among high exposure users rises consistently as credit card vintage increases, indicating that experienced borrowers with multiple unsecured loans require closer monitoring.
Repayment Priorities Are Changing
The report says borrowers are no longer treating credit card dues as the first repayment priority.
Diversified credit users often prioritise repayments on consumer durable loans over credit card dues. High exposure users, however, tend to assign similar priority to both credit card and consumer durable loan repayments.
According to the report, lenders can no longer assess repayment behaviour by looking only at a customer's credit card performance.
Customer Loyalty Driven by Credit Needs
The study also examines why borrowers shift between lenders.
Among occasional card users, card-centric users and diversified credit users, improvements in credit scores were among the strongest triggers for changing lenders, along with new credit offers and balance transfer opportunities.
Balance transfers, higher credit limits and customer experience also influence borrower loyalty across different customer segments.
The report suggests that lenders will need more personalised customer engagement rather than relying mainly on rewards programmes or promotional offers.
Traditional Lending Models Under Pressure
According to TransUnion CIBIL, India's credit card market has reached a stage where traditional portfolio management approaches may no longer be adequate.
The report says growth opportunities lie among borrowers with multiple credit products, but these customers also carry risks that may not be visible when lenders evaluate products in isolation.
As borrowers increasingly spread their borrowing across multiple lenders and products, financial institutions will need better customer segmentation and lifecycle management to balance growth with rising credit risk.
Summing up, the report says the future of India's credit card market will depend less on issuing additional cards and more on understanding how credit cards fit into a customer's overall borrowing profile.
"Cards have structurally evolved from being the default unsecured credit to a dynamic credit balance within consumers' wallets," the report says. It adds that lenders who better understand a customer's overall borrowing ecosystem will be better placed to improve long-term customer value while containing risk.
