Credit card usage in India is rising fast — and so is debt. By May 2025, credit card dues had reached a massive ₹2.90 lakh crore, with defaults increasing by 44%.
Many people fall into debt not because of emergencies, but due to avoidable mistakes. Here are six common credit card habits that can drag you into a debt trap, and how to avoid them.
1. Overspending Beyond Your Budget
Using a credit card feels easy and rewarding, especially with offers and cashback deals. But this often leads to spending more than you can afford.
Expert tip: Keep your monthly credit card usage within 30–35% of your income.
Track all expenses and avoid impulse shopping to maintain control.
2. Paying Only the Minimum Amount Due
This is one of the worst credit card mistakes. Paying just the minimum due may seem convenient, but it doesn’t reduce your debt significantly.
Interest keeps building at 3% to 3.8% monthly — which means up to 46% annually.
Always try to pay the full amount or at least clear high-interest cards first to avoid a snowballing debt cycle.
3. Holding Too Many Credit Cards
Having multiple credit cards for offers and limit boosts can backfire. You lose track of your total debt and repayments.
Using one card to pay another’s bill leads straight into a debt trap.
Keep only as many cards as you can comfortably manage.
If overwhelmed, consider debt consolidation to streamline repayment.
4. Ignoring the Due Date
Missing your credit card due date causes:
Late payment fees
Drop in credit score
Loss of interest-free period
Even one late payment can affect your financial history.
Set auto-debit or reminders to ensure you never miss a due date.
5. Withdrawing Cash from Credit Card
Using your credit card at an ATM is a costly mistake. Interest starts immediately, with no grace period.
Only withdraw cash in emergencies.
Repay quickly to avoid growing debt.
Frequent withdrawals can deplete your savings fast.
6. Falling for No-Cost EMI & BNPL Offers
No-Cost EMI and Buy Now, Pay Later (BNPL) schemes seem easy, but often come with hidden charges and compound interest.
Many users don’t read the terms and end up paying more than expected.
Always calculate the real cost and read the fine print before opting in.
Final Tip:
Being cautious with your credit card doesn’t mean avoiding it — it means using it smartly. Responsible usage, full payments, and timely tracking can help you enjoy the benefits without falling into debt.
