How UPI, fintech are driving India's credit card surge

India crossed the milestone of 12 crore active credit cards in May 2026, with more than 10.17 lakh new cards added during the month. Net additions rose 33.7 per cent year on year, according to the latest RBI data. The milestone underlines the growing popularity of credit cards in India and reflects a broader shift in consumer payment behaviour.

As digital commerce and everyday digital payments expand, consumers are increasingly seeking payment solutions that combine convenience and flexibility with rewards, cashback, purchase protection, fraud safeguards and interest-free credit periods.

Credit cards are also no longer seen as a product meant only for high-income earners. A combination of traditional credit cards and UPI-linked credit products is making formal credit more accessible to India’s middle class. Credit card spends crossed Rs23.62 lakh crore in FY26, reflecting growing adoption across metros as well as Tier II and Tier III cities.

One of the key drivers of this shift is the rise of app-based, UPI-linked credit, including Credit on UPI and postpaid credit lines. Digital onboarding, minimal paperwork and quick issuance allow consumers to access formal credit even for small-ticket purchases such as groceries, food and payments to local merchants.

Traditional credit cards also have become more appealing. Lifetime free cards, cashback, rewards, EMI options and lifestyle benefits have made them attractive for routine spending. At the same time, growing awareness about credit scores is encouraging consumers to use credit more carefully to build a stronger financial profile and improve eligibility for future loans.

Experts are seeing increased participation in the formal credit ecosystem across income groups, driven by digital adoption and greater financial awareness. “The availability of lifestyle-focused, health, travel, and retail-specific cards, along with personalised offerings and FD-backed secured credit cards for first-time users has made credit cards more relevant and accessible across consumer segments, including the middle class,” said Sachin Seth, regional managing director, CRIF India and South Asia.

The resurgence of credit cards can also be attributed to the growth of e-commerce and increasingly attractive reward programmes. Modern cards offer benefits extending beyond borrowing, including cashback, travel rewards and merchant discounts. Their integration with UPI-enabled payment platforms is further widening their utility. As consumers become more digitally connected, credit cards are evolving into tools for everyday transactions and financial management.

“Credit cards provide the greatest value when used for convenient payments rather than as a long-term source of credit. Consumers should aim to pay off their entire balance each month and keep their credit utilisation below 30 per cent of their available credit limit. It is also important to choose cards that align with spending habits and avoid going into debt on discretionary purchases. Responsible credit card use not only reduces interest costs but also builds a strong credit profile,” said Kapil Maurya, executive director of Urban Money, a fintech loan aggregator.

The market now offers cards tailored to a wide range of consumer needs. These include cashback cards for everyday purchases, travel cards offering airline and hotel benefits, and shopping and lifestyle cards with merchant-specific rewards. Fuel cards, premium cards with concierge services and lounge access, co-branded cards linked to retail or e-commerce platforms and secured cards for first-time borrowers have further expanded consumer choice.

“Credit cards deliver the greatest value when they are used as a financial management tool rather than a means to overspend. Consumers should choose a card that aligns with their spending habits whether for travel, groceries, or everyday expenses, to maximise rewards and benefits. Paying the full outstanding balance on time and keeping credit utilisation at a healthy level (ideally below 30 per cent of the available credit limit) can help build a strong credit score while avoiding unnecessary interest charges,” said Siddharth Mehta, co-founder and COO of Kiwi, a fintech startup.

As consumers increasingly use multiple credit products, keeping track of spending and repayment becomes crucial. “Setting up auto-pay, enabling due-date reminders and transaction alerts, and regularly reviewing account statements can help avoid missed payments, minimise interest costs, and maintain long-term financial discipline. Ultimately, the right credit product is one that aligns with an individual’s spending patterns, repayment capacity and financial goals. Comparing features, fees, rewards and eligibility can help consumers make an informed choice,” said Mehta.

Experts caution that the convenience and flexibility offered by credit products must be matched by responsible usage. Every transaction is a financial commitment that has to be repaid. The most important rule is to pay the total outstanding amount by the due date. Many first-time users assume that paying the minimum amount due clears the bill. In reality, it generally helps avoid the account being treated as overdue, while interest continues to accrue on the remaining balance. This increases borrowing costs and can eventually lead to a debt cycle.

“Consumers should borrow within their repayment capacity and maintain a healthy credit utilisation ratio. With UPI-linked credit cards and postpaid credit products, instant digital onboarding and seamless UPI payments make credit more accessible, but they also require greater spending discipline,” said Mehta.

Experts also advise consumers to avoid cash withdrawals using credit cards, as these typically attract charges and interest from the date of the transaction, without the usual interest-free period. Consumers should understand the fees and repayment terms attached to their credit products, monitor transactions regularly and enable real-time alerts to protect themselves against fraud.

When used responsibly, credit can help consumers manage cash flows, establish a strong credit history and gain greater financial flexibility. The benefits of rewards and cashback, experts say, should remain secondary to disciplined repayment.

“Users should treat credit cards as a repayment tool first, and a rewards tool second,” said Sarika Grover, co-founder of LoansJagat, a debt consolidation marketplace. “One should track billing cycles closely. One should also rely on the RBI’s two-factor authentication mandate for safer transactions. One must avoid cash withdrawals and keep credit utilisation below 30 per cent of the total limit to protect long-term CIBIL scores. Users should also read co-branded terms carefully, since fee structures have changed for several cards from January 15, 2026. Discipline in repayment protects both your credit score and financial reputation.”