You are spending more than ever on credit cards — but leaving money on the table
India's credit card spending has more than tripled in the past five years, but most users are still failing to maximise rewards. A new study shows that choosing the wrong credit card could cost consumers thousands—or even lakhs—of rupees in missed savings every year.
- Jun 29, 2026,
- Updated Jun 29, 2026 7:35 AM IST
India's love affair with credit cards is growing at a record pace. Over the past five years, the value of credit card transactions has more than tripled as consumers increasingly rely on plastic for everything from groceries and travel to online shopping and utility bills.
But while spending is surging, a new study suggests that most users are failing to maximise the rewards their cards offer. According to a study by 1 Finance Magazine, 92% of credit card users are leaving substantial savings on the table because their cards are not aligned with their spending patterns.
The study analysed transaction data from 129 individuals across income groups and found that the average cardholder currently earns only around 4% in effective annual savings through rewards, cashback and benefits. With the right combination of cards, however, that figure could rise to 10%, and even 13-14% for higher spenders.
MUST READ: Wrong credit card could be costing you up to ₹2 lakh a year, says study
Credit card usage has exploded
The findings come against the backdrop of a rapidly expanding credit card market.
According to the study, the value of credit card payments increased from ₹6.3 lakh crore in FY2020-21 to ₹21.1 lakh crore in FY2024-25, a more than threefold jump. During the same period, transaction volumes rose from 176.4 crore to 477.4 crore, reflecting the growing adoption of digital payments across the country.
However, rising card usage has not translated into better reward optimisation.
The reward gap widens with spending
The study found that the higher the annual spending, the greater the amount consumers lose by using the wrong credit card.
Someone spending less than ₹5 lakh a year could potentially save ₹20,000-25,000, but currently misses out on around ₹4,000-5,000 annually because of poor card selection.
For consumers with annual expenses of ₹5-8 lakh, the unrealised savings increase to ₹38,000-42,000 a year.
The gap becomes even wider for higher spenders. Those spending ₹8-15 lakh annually could be missing rewards worth ₹85,000-90,000, while households spending more than ₹15 lakh a year could be foregoing ₹2-2.1 lakh annually despite already using credit cards extensively.
MUST READ: ‘It happened slowly...': Indian couple’s American Dream turns into ₹8.4 crore debt
Why are users missing out?
The report says the problem is rarely excessive spending. Instead, it is a mismatch between where people spend and the rewards their cards actually offer.
Many consumers continue to use the same credit card across all purchases, even though different cards offer higher rewards on categories such as travel, dining, groceries, fuel or online shopping. Others maintain several cards without strategically using them to unlock milestone bonuses or accelerated reward rates.
MUST READ: Debt trap warning signs: Why more Indians are borrowing to repay borrowings
The study also notes that redemption habits matter. Redeeming reward points for travel bookings or partner vouchers can deliver two to five times more value than redeeming points through standard merchandise catalogues.
How to maximise savings
The report recommends reviewing the last 6-12 months of spending before selecting a credit card. Instead of accumulating multiple cards, consumers should ideally maintain one primary card covering 60-70% of their expenses and one complementary card for categories where the primary card is less rewarding.
MUST READ: Gold loans just crushed credit card debt in India. The gap is now massive
Planning purchases to cross spending milestones and reviewing reward structures periodically can also improve returns without increasing overall spending.
A case study cited in the report found that following this approach increased one customer's effective savings rate from 3-4% to 8.5-9%, generating ₹85,000-95,000 in annual benefits while keeping spending unchanged.
With credit card spending continuing to climb, the study suggests that choosing the right card is no longer just about convenience. It has become an important personal finance decision that can meaningfully improve post-spending savings without requiring consumers to spend an extra rupee.
MUST READ: BT Explainer: When do banks start charging interest on credit card transactions?
India's love affair with credit cards is growing at a record pace. Over the past five years, the value of credit card transactions has more than tripled as consumers increasingly rely on plastic for everything from groceries and travel to online shopping and utility bills.
But while spending is surging, a new study suggests that most users are failing to maximise the rewards their cards offer. According to a study by 1 Finance Magazine, 92% of credit card users are leaving substantial savings on the table because their cards are not aligned with their spending patterns.
The study analysed transaction data from 129 individuals across income groups and found that the average cardholder currently earns only around 4% in effective annual savings through rewards, cashback and benefits. With the right combination of cards, however, that figure could rise to 10%, and even 13-14% for higher spenders.
MUST READ: Wrong credit card could be costing you up to ₹2 lakh a year, says study
Credit card usage has exploded
The findings come against the backdrop of a rapidly expanding credit card market.
According to the study, the value of credit card payments increased from ₹6.3 lakh crore in FY2020-21 to ₹21.1 lakh crore in FY2024-25, a more than threefold jump. During the same period, transaction volumes rose from 176.4 crore to 477.4 crore, reflecting the growing adoption of digital payments across the country.
However, rising card usage has not translated into better reward optimisation.
The reward gap widens with spending
The study found that the higher the annual spending, the greater the amount consumers lose by using the wrong credit card.
Someone spending less than ₹5 lakh a year could potentially save ₹20,000-25,000, but currently misses out on around ₹4,000-5,000 annually because of poor card selection.
For consumers with annual expenses of ₹5-8 lakh, the unrealised savings increase to ₹38,000-42,000 a year.
The gap becomes even wider for higher spenders. Those spending ₹8-15 lakh annually could be missing rewards worth ₹85,000-90,000, while households spending more than ₹15 lakh a year could be foregoing ₹2-2.1 lakh annually despite already using credit cards extensively.
MUST READ: ‘It happened slowly...': Indian couple’s American Dream turns into ₹8.4 crore debt
Why are users missing out?
The report says the problem is rarely excessive spending. Instead, it is a mismatch between where people spend and the rewards their cards actually offer.
Many consumers continue to use the same credit card across all purchases, even though different cards offer higher rewards on categories such as travel, dining, groceries, fuel or online shopping. Others maintain several cards without strategically using them to unlock milestone bonuses or accelerated reward rates.
MUST READ: Debt trap warning signs: Why more Indians are borrowing to repay borrowings
The study also notes that redemption habits matter. Redeeming reward points for travel bookings or partner vouchers can deliver two to five times more value than redeeming points through standard merchandise catalogues.
How to maximise savings
The report recommends reviewing the last 6-12 months of spending before selecting a credit card. Instead of accumulating multiple cards, consumers should ideally maintain one primary card covering 60-70% of their expenses and one complementary card for categories where the primary card is less rewarding.
MUST READ: Gold loans just crushed credit card debt in India. The gap is now massive
Planning purchases to cross spending milestones and reviewing reward structures periodically can also improve returns without increasing overall spending.
A case study cited in the report found that following this approach increased one customer's effective savings rate from 3-4% to 8.5-9%, generating ₹85,000-95,000 in annual benefits while keeping spending unchanged.
With credit card spending continuing to climb, the study suggests that choosing the right card is no longer just about convenience. It has become an important personal finance decision that can meaningfully improve post-spending savings without requiring consumers to spend an extra rupee.
MUST READ: BT Explainer: When do banks start charging interest on credit card transactions?