The Increasing Reliance on Credit Cards Amongst Indian Youth
Economic stagnancy to fearful tendencies around seeking travel and entertainment caused by the pandemic brought about many transitions. However, with the rollout of vaccines and herd immunity, these claustrophobic barriers are beginning to fade away, and people are feeling a sense of relief and gratitude.
Moreover, technology has played a significant role in this process. In the past few years, there has been a massive shift towards digitalization, which has seeped into every aspect of our lives. Offline servicing is no longer as relevant as it once was, as people now have access to a wide range of online services, including tax filing and utilities.
One of the most significant impacts of technology on our daily lives has been in the area of financial management. With the growing awareness of financial planning, tax-saving instruments, and investment opportunities, people are becoming more informed and educated about their finances. This has made it easier for people to manage their finances and make informed decisions about their investments.
Furthermore, people are beginning to understand that financial growth is subjective and varies based on individual circumstances. Therefore, there is a growing need for expertise in this area, and people are seeking out information and advice to help them make the best financial decisions.
As a result, there is a more relaxed and open-ended conversation around tax-saving instruments, credit cards, and building investment portfolios.
According to the Reserve Bank's most recent data, credit card outstanding balances have increased by more than 20% during the first ten months of the current fiscal year. This growth in credit card usage can be attributed to the convenience it provides for making payments in various categories, such as health and fitness, education, and utility bills.
V Swaminathan, who is the Executive Chairman of Andromeda Loans, stated that secured loans like mortgage loans and business loans have become less popular in recent times, whereas the personal loan sector is experiencing growth. According to him, young individuals who are new to the workforce are more financially literate than their predecessors and are striving to establish a good credit score. Additionally, with the rise of fintech companies that provide information and services online, young people are making more informed decisions when it comes to credit card purchases.
By the end of January 2023, various banks in the country had issued approximately 82.5 million credit cards. The top five credit card issuers in the country are HDFC Bank, SBI Card, ICICI Bank, Axis Bank, and Kotak Bank.
Financial planning aids individuals in accomplishing their objectives and aspirations. Entrepreneurship fosters the growth of novel ideas within businesses and contributes to the economy. Therefore, financial planning is the initial step toward future entrepreneurship. In India, a thriving economy, many young people, and professionals have ambitions of becoming entrepreneurs. The first step towards achieving this goal is to accumulate financial resources.
Honing a comprehensive understanding of markets, procedures, and strategies to capitalize on investment and tax returns is the need of the hour.