Gen Z consumers are transforming India's retail credit landscape by entering the formal credit system earlier, spending more aggressively after receiving their first credit card and expanding into multiple credit products at a much faster pace than previous generations, creating significant long-term growth opportunities for lenders, according to a new report by TransUnion CIBIL.
Summing up the shift, the report says, "Today's new-to-credit card (NTCC) consumers are entering the market with prior credit experience, spending more and expanding their credit portfolios faster than earlier cohorts, requiring lenders to rethink acquisition and engagement strategies."
The report,
Beyond the Swipe: How India Uses Card as a Credit Instrument, compares first-time credit card users who entered the market in 2018 with those who obtained their first cards in 2024 and concludes that Gen Z borrowers are arriving with stronger credit familiarity, broader borrowing experience and significantly higher engagement with formal financial products.
Younger Consumers Entering Formal Credit Earlier
The report finds that India's new generation of credit card customers is considerably younger than before.
Consumers aged 30 years or below now account for a substantially larger share of first-time credit card holders than they did six years ago. At the same time, the market has broadened geographically, with increasing participation from semi-urban and rural areas.
According to TransUnion CIBIL, the shift reflects deeper financial inclusion as formal credit penetrates beyond metropolitan centres and reaches younger consumers much earlier in their financial lives.
First Credit Card No Longer the First Credit Product
Perhaps the report's most striking finding is that today's first-time credit card holders are often not first-time borrowers.
Unlike millennials, who typically began their formal credit journey with a credit card, a significant proportion of Gen Z consumers already possess an established borrowing history before receiving their first card.
The report shows that before obtaining their first credit card:
• 31% already hold two or more credit products.
• 23% have small-ticket personal loans.
• 18% possess consumer durable loans.
This suggests that young consumers are increasingly using digital lending platforms, buy-now-pay-later products and consumer finance well before entering the traditional credit card market.
Spending Accelerates Soon After Card Issuance
The report also highlights a sharp increase in spending behaviour among Gen Z borrowers immediately after receiving their first credit card.
Compared with first-time cardholders in 2018, the 2024 cohort records significantly higher card spending during the initial months after card issuance, indicating greater confidence in using formal credit and stronger engagement with digital payments.
According to the report, the trend reflects changing consumer behaviour as younger borrowers increasingly view credit cards not merely as emergency financing tools but as an integral part of their everyday spending habits.
Credit Portfolios Expand Much Faster
Gen Z borrowers are also building diversified credit portfolios far more rapidly than previous generations.
Within just 12 months of receiving their first credit card:
• 69% open at least one additional credit product.
• Nearly half acquire another credit card.
• Many expand into personal loans and other unsecured credit facilities.
The report says this rapid diversification presents lenders with multiple cross-selling opportunities early in the customer lifecycle while also requiring more sophisticated monitoring of credit behaviour.
Greater Customer Loyalty Creates Long-term Value
The report points to another important trend for lenders—Gen Z consumers display stronger loyalty towards the issuer of their first credit card.
Compared with millennials, younger borrowers are less likely to switch issuers during the early years of their credit journey, giving banks a valuable opportunity to build long-term customer relationships through personalised financial products and services.
TransUnion CIBIL says lenders that successfully engage these customers early are better positioned to increase lifetime customer value through additional lending, deposits and wealth management offerings.
Opportunity Comes with Responsibility
While the emergence of younger, more credit-active consumers represents a major growth opportunity, the report cautions that lenders must adapt their underwriting and engagement strategies to reflect changing borrower behaviour.
Traditional acquisition models that assume first-time credit card users have little or no prior borrowing history are becoming increasingly outdated.
Instead, banks need to evaluate customers based on their broader credit ecosystem, including existing unsecured loans, repayment behaviour and evolving borrowing patterns, rather than treating credit cards as standalone products.
A New Generation Is Redefining Consumer Credit
The report concludes that India's next phase of retail credit growth will be driven by consumers who enter the financial system earlier, adopt multiple products more quickly and interact with lenders in fundamentally different ways than previous generations.
For banks and non-banking finance companies, this changing demographic presents both an opportunity to deepen customer relationships and a challenge to redesign credit strategies around increasingly sophisticated, digitally connected borrowers. As Gen Z matures financially, the report suggests, their behaviour is likely to shape the future direction of India's consumer lending market.
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