There's a strange trend happening in Indian households right now. People are taking personal loans to pay credit card bills. They're using one credit card to pay off another. They're buying insurance policies on EMI. And somehow, this has become so normalized that nobody's calling it what it actually is: financial quicksand.

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The numbers tell an uncomfortable story. India's retail credit has grown from ₹28 lakh crore in 2019 to over ₹55 lakh crore in 2024. That's nearly doubled in five years. Personal loans have surged by 35% year-on-year. Credit card outstanding has crossed ₹2.3 lakh crore. And this isn't just happening in metros anymore. Tier-2 and Tier-3 cities are driving this growth.

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But here's the twist: GDP growth hasn't doubled. Salaries haven't doubled. What has doubled is our willingness to borrow for things we don't really need.

Walk into any electronics store today, and before they show you the product, they'll ask if you want it on EMI. Want a phone? EMI. Want a vacation? EMI. Want a course? EMI. There's literally a "buy now, pay later" option for ordering food now. We've reached a point where debt isn't a last resort anymore. It's the first option.

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And the scary part? We've stopped seeing it as debt. It's become "affordability." That ₹80,000 phone becomes "just ₹5,000 a month for 18 months." Never mind that you're paying ₹90,000 in total. Never mind that 18 months from now, you'll want the next model and will probably take another EMI for that too.

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This isn't about judging individual choices. It's about recognizing a pattern that's quietly creating a generation that's constantly one salary delay away from a crisis.

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Credit cards are probably the most misunderstood financial product in India right now. They're being marketed as status symbols and rewards machines. What doesn't get emphasized enough is that they're also the most expensive form of debt you can take. Annual interest rates hover between 36% to 42%. That's not a typo. If you're carrying forward a balance of ₹50,000 and paying minimum dues, you could end up paying ₹18,000 in interest alone over a year.

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Yet credit card debt in India has been growing at one of the fastest rates globally. And it's not because people suddenly have more money to spend. It's because credit has become dangerously easy to access.

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The fintech revolution, for all its benefits, has made borrowing frictionless. You can get a personal loan approved in 10 minutes now. No questions about why you need it. No counseling about whether you can afford it. Just a quick credit score check and money in your account. Apps have gamified lending. You get "pre-approved" offers that feel like achievements. You get cashback for taking loans. The entire system is designed to make borrowing feel good.

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But debt doesn't care about how easy it was to get. It still needs to be repaid, with interest, regardless of whether your circumstances change.

There's also a generational shift happening that's making this worse. The generation that grew up in the '80s and '90s saw their parents save aggressively and borrow reluctantly. But the current generation has grown up in an era of instant gratification, social media comparison, and aggressive marketing. When everyone around you is traveling, upgrading phones, and "living their best life," the pressure to keep up is real. And when keeping up requires borrowing, many people don't think twice.

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The problem compounds when life events hit. Medical emergencies, job losses, family responsibilities, these things don't wait for your EMI to finish. And when you're already stretched thin with multiple loan commitments, any unexpected expense becomes a crisis. That's when people start taking loans to pay off loans. That's when credit card debt starts rolling over month after month. That's when the trap closes.

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What makes this especially problematic in India is the lack of financial literacy around debt management. People understand that loans need to be repaid, but they don't always understand the true cost. They don't calculate total interest payable. They don't factor in opportunity cost. They don't realize that borrowing ₹2 lakhs at 18% interest for three years means paying ₹66,000 in interest alone.

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And then there's lifestyle inflation. Every salary increment becomes an excuse to upgrade lifestyle, usually on credit. The ₹30,000 salary becomes ₹50,000, but expenses jump from ₹25,000 to ₹48,000. There's never any breathing room because the new income immediately gets allocated to new EMIs.

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This isn't sustainable. And the cracks are starting to show. Credit card delinquencies have been rising. Personal loan defaults are up. Banks are tightening lending norms because they're seeing stress in retail portfolios. The RBI has already flagged concerns about unsecured lending growth.

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But the bigger concern isn't just defaults. It's the opportunity cost of this debt trap. Every rupee going toward interest on a credit card or personal loan is a rupee not being invested. It's a rupee not building an emergency fund. It's a rupee not working toward long-term goals.

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Compound interest works both ways. When you're investing, it builds wealth. When you're borrowing, it destroys it. A 20-year-old taking on unnecessary debt today isn't just paying interest. They're losing out on decades of potential compounding on that money.

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So what's the way out? It starts with changing how we think about debt. Debt isn't always bad. A home loan can be a smart wealth-building tool. An education loan can be an investment in your future. A business loan can help build assets. But debt for consumption, debt for things that depreciate, debt to maintain appearances — that's where the trouble begins.

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The uncomfortable truth is that if you need to borrow money to buy something that doesn't generate income or appreciate in value, you probably can't afford it. And that's okay. Not being able to afford everything you want right now is normal. It's healthy. It's what previous generations understood instinctively.

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There's also a need to build better financial habits before the debt becomes unmanageable. An emergency fund isn't optional anymore. It's essential. Even ₹50,000 saved can prevent you from taking a personal loan when your laptop crashes or your bike needs major repairs. Learning to differentiate between wants and needs isn't being cheap. It's being smart. Paying off high-interest debt before investing in markets isn't boring. It's the highest guaranteed return you can get.

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And maybe, just maybe, we need to normalize not having things right away. Not upgrading your phone every year. Not taking vacations you can't afford. Not buying clothes on credit. The Instagram lifestyle isn't real for most people. It's curated, filtered, and often debt-funded.

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The scariest part about this debt trap is how invisible it is. People don't look "in trouble." They're dressed well, eating out, traveling, posting stories. But underneath, they're one missed salary away from defaulting. They're paying minimum dues and watching their debt compound. They're stressed, stretched, and stuck.

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This isn't just an individual problem anymore. When retail debt grows at these rates, it becomes a systemic risk. When middle-class households are overleveraged, consumer spending becomes vulnerable. When young professionals start their careers already in debt, wealth creation gets delayed by years.

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India's growth story is real. Opportunities are expanding. Incomes are rising. But if we're borrowing against the future to fund the present, we're not really building wealth. We're just creating the illusion of prosperity while quietly sinking into financial vulnerability.

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The solution isn't to never borrow. It's to borrow smartly, sparingly, and only when it genuinely adds value. It's to understand that credit is a tool, not a lifestyle subsidy. It's to recognize that financial freedom doesn't come from having everything now. It comes from having the discipline to build toward having everything later, without the burden of debt.

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Here's the real takeaway: the most expensive purchase you can make isn't a car or a vacation. It's the habit of buying things on borrowed money. Because that habit compounds just like interest, quietly, consistently, and ruthlessly. And by the time you realize you're trapped, getting out becomes exponentially harder.

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The middle class built India's economy on the back of savings and delayed gratification. Maybe it's time to remember that before credit cards and personal loans turn prosperity into pressure.