Lessons in Investing All Posts by Ankur Warikoo « Previously
The Quiet Debt Trap: How a Generation is Drowning in Easy Loans
It is the second of the month. You are lying in bed at 9:00 PM, casually scrolling through Instagram, when a beautiful notification lights up your screen. Your salary—62,000 rupees—has just been credited to your bank account. In that moment, you feel like a real adult. You feel like these are my own hard-earned rupees. After years of fulfilling your parents' dreams, after all the grind, a steady 62,000 lands in your account every single month. You drift off to sleep with a quiet smile, dreaming pleasant dreams.
Morning arrives, and your phone is flooded with SMS alerts. You know the kind—the transaction completion messages. Rent: 22,000 rupees, gone. Credit card bill: 14,000 rupees, gone. That laptop you bought on a zero-cost EMI: 4,800 rupees, gone. LazyPay, for reasons you cannot quite recall: 3,200 rupees, gone. Amazon Pay Later: 6,100 rupees, gone. Your sister got married recently and you took a personal loan for the wedding—its EMI: 9,500 rupees, gone. And then there is one more debit of 4,800 rupees from some lender you barely remember signing up with. Last night you were the master of 62,000 rupees. This morning, 2,400 rupees remain. The month hasn't even properly begun. You haven't bought a single meal with this money yet. You stare at the number and genuinely wonder: what on earth is going on?
You do not remember taking all these loans. You never sat across a banker. You never signed a mountain of paperwork. You simply went on Amazon, spotted some headphones, saw a "Pay Later" option, clicked it, and moved on with your day. Then you visited a Croma store and the salesperson casually suggested converting the purchase to a zero-cost EMI—done. Then your credit card bill arrived and the app nudged you to convert that large amount into easy EMIs—done. You went to a friend's party, swiped your credit card for the entire bill to collect reward points, and took cash from everyone else. Slowly, imperceptibly, you joined the ranks of countless Indians who are silently carrying around 80,000 rupees or more in floating debt. A generation—my generation—has emerged where taking a loan no longer feels like a burdensome decision. It feels almost as casual as handing out sweets.
Today, I want to talk about this generation that never tires of borrowing, and about who really profits when loans are sold to us like candy.
The Numbers You Might Not Want to See
Let us start with the figures that paint a sobering picture. In 2025, Indian banks reported a loan category called "Other Personal Loans." Its outstanding amount touched a staggering 15.5 lakh crore rupees. Within that, credit card outstanding alone stands at roughly 3,70,000 crore rupees. A decade ago, India had around 21 million credit cards—roughly 2.1 crore. Today, that number has ballooned to 115 million cards, nearly 11.5 crore. In just one month—September 2025—Indians swiped, tapped, and spent approximately 2.25 lakh crore rupees through credit cards. Not a year. One single month.
Who is carrying all this debt? A report revealed that 41% of all this debt is borrowed by Gen Z—those born between 1997 and 2012. On fintech lending platforms, 60% of users belong to this generation. And 45% of new credit card owners are under the age of 30.
Now, not all debt is bad. If someone takes a loan to study, to start a business, to genuinely move forward in life—great. But there is another side to this story. Around 60% of personal loan borrowers already have three or more other loans running simultaneously. Credit card NPAs—Non-Performing Assets, meaning defaults where the person simply cannot pay—have climbed to nearly 6,700 crore rupees, an increase of 28%. This figure has multiplied fivefold in just four years.
The Three-Headed Debt Monster
There are three kinds of debt that Gen Z keeps reaching for, almost compulsively. Let us dissect each one.
1. Credit Cards: Best Friend or Worst Enemy?
Many people think of a credit card merely as a cashback tool, a lounge-access pass, or a "swipe now, pay next month" convenience. And honestly, when used wisely, a credit card can be your best friend. The smartest people I know definitely use credit cards. Why? Because they understand that a credit card essentially gives you a one-month interest-free loan. You spend today, the bill gets generated a month later, and if you pay the full amount, the debt was completely free. Additionally, it builds your credit history, which helps you secure home loans, education loans, or car loans at lower interest rates later. Plus, there are reward points and perks. Credit cards are genuinely incredible when treated as friends.
But if you fail to pay the full bill—if you slip—that same credit card becomes your worst enemy. The interest rate on credit card debt is not 10%, not 12%, not even 15%. It is 36%, 40%, 45%, even 48% per annum. If you have a 1-lakh-rupee credit card bill and you keep paying only the minimum amount due—say 5,000 rupees—within a single year your outstanding amount will balloon to somewhere between 1,36,000 and 1,48,000 rupees. It is wild how quickly this compounds. In fact, if you only make minimum payments on a 1-lakh-rupee bill, do you know how long it will take to clear that debt completely? You cannot even guess. Twenty-one years. Twenty-one years to pay off 1 lakh rupees, because your small payments keep getting devoured by the enormous interest.
2. Buy Now, Pay Later (BNPL): The Seductive Trap
Buy Now, Pay Later is incredibly seductive. Someone invented this concept and thought, "This is a brilliant game—let people buy today, get them hooked, and they will buy anything because they can always pay later." Since no collateral is pledged, BNPL is an unsecured loan. And unsecured loans are as expensive as credit cards or personal loans—sometimes even pricier. Simpl, LazyPay, Amazon Pay Later, Flipkart Pay Later, Paytm Postpaid, Mobikwik Zip—all of these are cleverly designed products. I am not here to vilify them or accuse them of wrongdoing. But the truth is, it is frighteningly simple for a Gen Z user to glide through these apps and make purchases that feel almost free.
Why does it feel so effortless? Because there is no banker sitting across the table. There are no documents to sign. You tap, tap, tap, enter your PAN somewhere, and you are done. Here is what happens in the backend: every single BNPL loan is financed by some NBFC—a Non-Banking Financial Corporation. Every one of these transactions gets recorded in your credit history and filed in the RBI logs. That 499-rupee biryani you ordered on Pay Later? Recorded. That 1,200 rupees you spent on petrol via Pay Later? Recorded. Because it happens online and in such tiny amounts, it does not feel like a loan at all. It feels like UPI—just another 17 rupees here, 217 rupees there. And a 2,000-rupee or 3,000-rupee Pay Later purchase gets lumped right in. Most of the time, you do not even remember you used Pay Later—exactly as we saw in the opening scenario.
3. The Personal Loan Deluge
Everyone knows about personal loans by now, but even here the landscape has split into two distinct streams. First, there are personal loans from traditional banks—HDFC, ICICI, SBI, and the like. These come with interest rates around 12% to 15%, depending on fluctuations. They are unsecured too, and they are typically offered on the basis of your salary. If you work at a recognized company, the interest rate may dip slightly because the bank perceives some sense of security.
Then, a new world has emerged recently: fintech apps that can disburse a personal loan to you on a single click. CreditBee, Kred, Fi, Navi—the names keep multiplying. According to reports, the average loan through these channels is around 9,700 rupees. It is not a huge amount, which is precisely why it does not feel like a loan. You need 10,000 rupees instantly? Click. It lands in your bank account. Around 91% of all portfolios consist of loan amounts under 50,000 rupees. Interest rates range from 18% to 36%, and for some products, they climb even higher.
And then there are those shady Chinese loan apps that have no allegiance to any regulatory framework. They will give you any amount, slowly reeling you in, and they will ask for access to your contact list. God forbid you miss a payment—those apps will start calling your relatives. They will create morphed, inappropriate images and threaten to share them. They have no ethics, no conscience. They can go to any length to recover that money, and their interest rates are insane.
A Vicious Cycle: I have seen so many people trapped in a loop where they take a loan from one app to pay off another, then a third app to pay off the second. App after app is downloaded, money arrives in a snap, and the trap they are falling into is nothing short of terrifying.
| Debt Type | Typical Interest Rate | Collateral | Key Risk |
|---|---|---|---|
| Credit Cards | 36% - 48% p.a. | Unsecured | Minimum payments can stretch 1 lakh debt over 21 years |
| BNPL (Buy Now, Pay Later) | 18% - 36%+ p.a. | Unsecured | Feels like UPI; small transactions accumulate silently |
| Fintech Personal Loans | 18% - 36%+ p.a. | Unsecured | Predatory recovery tactics; easy rollover into more debt |
| Traditional Bank Personal Loans | 12% - 15% p.a. | Unsecured | Still adds to overall debt burden if not managed |
What Are We Actually Borrowing For?
If this debt were flowing toward education or housing, I would not be writing this piece. But the data tells a different story.
Weddings. The average Indian wedding costs around 12.5 lakh rupees. That is five times the country's GDP per capita. A report by Jefferies estimated that parents spend as much on a three- or four-day wedding as they do on 18 years of a child's education. And how are these weddings being funded? Personal loans. Every personal loan player actively advertises: "Get up to X lakh rupees as a wedding loan at Y% interest." We have reached a point where society finds it perfectly acceptable to tell a 28-year-old couple, "Why not start your married life with a 15-lakh-rupee loan?" And they will do it because we want the 400 guests who show up, take photos with us, and gossip about us to at least say nice things.
Travel. Gen Z is on a completely different wavelength when it comes to travel. An entire category has emerged: Travel Now, Pay Later. Not Buy Now—Travel Now. Because travel is freedom, bro. If you haven't travelled, how will you even exist on Instagram? So a 26-year-old takes a 2-lakh-rupee personal loan to visit Paris, to stand in front of the Eiffel Tower, to post that photo on Instagram. And for three years after that trip, a chunk of their salary vanishes every single month, and they keep wondering why their finances feel perpetually tight.
iPhones and gadgets. The iPhone, of course, sits at the centre of this universe. A six-month no-cost EMI, a replacement scheme, some cashback sprinkled on top—and suddenly the iPhone 17 Pro Max feels like it costs as much as an iPhone SE. Or if not an iPhone, then a Samsung. Samsung's Finance Plus can get you a loan in 15 to 20 minutes, no CIBIL score required. During Amazon's Great India Sale in 2024, reports showed that one in every four smartphones—25% of all phones—was purchased on a loan. And four out of five of those loans were no-cost EMIs. Flipkart's Pay Later transactions surged by eight and a half times during the Big Billion Days sale.
The Hidden Price of "No-Cost"
Let me be blunt: no-cost EMI is not truly no-cost. There is no free lunch, my friend. On the interest component, you pay 18% GST. There is usually a processing fee of around 199 rupees, which also attracts GST. You do not earn any reward points on the purchase, and sometimes the interest for the gap days between your first EMI and the purchase date gets added to your total. On a 1-lakh-rupee no-cost EMI, you are easily paying between 1,700 and 2,000 rupees in various forms of fees and embedded charges. It looks tiny, but remember—everything is adding up.
Your Credit History Is Your Reputation
Here is an interesting and deeply unsettling fallout of all this. Every single loan amount, no matter how small, is now being recorded. It becomes part of your credit history. Your credit report is increasingly being used to determine what kind of individual you are from a financial perspective. There are enough documented cases where companies, during background checks for hiring, pull up CIBIL reports. They want to see: does this person default? Do they pay their loans on time? How many loans are currently running? Is the amount manageable or substantial?
Imagine this: three years ago, you took a 60,000-rupee personal loan—maybe for your sister's wedding, maybe for something else. For whatever reason, you defaulted on three EMIs. Five years have passed. The loan is fully cleared. Everything is fine. You sit for a job interview, ace it, and then these buried skeletons crawl out. You are flagged as a defaulter. And that could mean you do not get the job offer. Not because you are bad at your work. Not because you lack the skills or the degree or couldn't clear the interview. But because you defaulted on some 2,800-rupee EMI three times when you were naive and didn't know any better.
Or let's say you apply for a home loan at age 35. You have followed all the sensible advice—you saved diligently, you applied the 24-10 rule, and you finally approach the bank. You assume your CIBIL score is 780 or above. It comes out as 700. Why? Because five years ago, for some reason, you missed a credit card payment. Now, that 8.5% home loan you were hoping for is offered to you at 9.5%. Your original EMI of 52,068 rupees becomes 55,932 rupees. You think, "Fine, what difference does a couple of thousand rupees make? I am 35, I have earned well, let's go ahead." But over 20 years on a 60-lakh-rupee loan, that difference compounds to roughly 15 to 18 lakh rupees. Every single credit card default, every missed EMI, every tiny slip—adds up.
Who Really Wins Here?
If we are losing, who is winning? I will not name specific companies because they are not doing anything illegal—they are doing exactly what they are designed to do. We are perhaps the fools for believing they are doing us a great favour. They don't force these products on us; we choose to dive in.
But consider the scale. There is one company with 55 billion dollars in outstanding loans and 110 million customers in this country alone, pulling in 55,000 crore rupees in annual revenue. Another company we used to associate merely with credit card payments now generates 2,800 crore rupees in revenue—almost all of it from interest on disbursed loans. A payment company has disbursed 52,000 crore rupees in loans and is earning handsomely from the interest. Every single entity is laser-focused on making money from our borrowing habits.
"You deserve this car. You deserve this house. You deserve this phone. You deserve this wedding. You deserve to travel. You deserve this fine life." They shout it from every billboard and every app notification. What they do not shout is: "The money you deposited with us earns you a maximum of five or six percent. But when you come to us for a loan, we will charge you 8-10% for education or housing, and 14-16% for a personal loan. We will lend you your own money and make a fool of you."
And we start believing that narrative. Every Gen Z individual is made to feel that if they do not own an iPhone 17 Pro Max on day one, they have achieved nothing in life. They are almost ashamed of using a phone that is two generations old, or an Android device, or a Windows laptop—because everyone wants a Mac, everyone wants the M5 chip, everyone wants the Neo. Everyone needs to flaunt an Apple Watch, everyone needs to show off a long sedan. Why? Because how can Sharma ji's car be longer than ours?
An entire generation is living on comparison. They cannot see what genuinely makes them happy; they can only see who looks richer on Instagram and wonder why they are not that person. So they will spend 2 lakh rupees to travel so they can prove they visited that destination, but they will not take a 2-lakh-rupee education loan. They will finance their wedding on debt, but they will not save to buy a home for their spouse. They will feed 400 strangers for three days, dance in front of them, burst firecrackers, and blow money—but they will not build an emergency fund for themselves.
Breaking Free from the Gilded Cage
Gen Z was born around 1997. When Facebook launched, they were 10 years old. By the time they became teenagers, Instagram, Facebook, WhatsApp, Twitter, LinkedIn, TikTok, and Snapchat were simply the default way of living. So every person photographs their meal before eating it, and that photo must scream that the meal costs thousands—no matter how mediocre the food actually tastes. Because only you tasted the food, but everyone saw the photo. And this is exactly what lenders exploit. They are tricking you into living a life that is not yours. They want you drowning in debt so that you stay trapped in your job, so that you never take a risk, so that you never dream of becoming a business owner. No—you are an employee, and you shall remain an employee. Know your place. You have taken loans; you are a debtor.
I would love for you to defy that. I would love for a movement to rise that declares: I will not live my life on debt. I am already navigating a world where jobs are scarce, salaries are stagnant, and prices keep climbing. I will not make my life worse by taking on a loan I do not need. It does not matter if I do not own that long sedan. The friends who laugh at me because I use an Android phone are not my friends at all. I want to spend time with people who love me for me—not for my clothes, my phone, my car, my dining habits, or my travel itinerary.
And if you manage to do this, my friend, you will start defeating the very forces that are trying to lure you into a beautiful golden cage through glossy advertisements. Do not fall for it. This is your life. You were born free. Stay free.
Conclusion: Key Takeaways
- Credit card debt is brutally expensive. With interest rates ranging from 36% to 48%, making only minimum payments can trap you for decades on even modest outstanding amounts.
- BNPL feels invisible but is fully recorded. Every small Pay Later transaction enters your credit history and can silently accumulate into an unmanageable monthly burden.
- Fintech personal loans are engineered for impulse. Instant disbursement of small amounts (average ~9,700 rupees) masks the fact that interest rates often exceed 36%, and predatory recovery practices are rampant among unregulated apps.
- Weddings, travel, and gadgets are the top debt drivers for Gen Z. These are lifestyle aspirations amplified by social media comparison, not wealth-building investments.
- "No-cost EMI" is never truly free. Embedded processing fees, GST on interest, and foregone rewards mean you almost always pay 1,700 to 2,000 rupees extra on a 1-lakh-rupee purchase.
- Your credit history affects your career and future borrowing power. A few missed EMIs can cost you a job offer or add 15-18 lakh rupees in extra interest on a home loan over 20 years.
- The lending industry profits from your financial fog. Billion-dollar revenues are built on the casual borrowing habits of a generation that often does not even remember taking the loans.
- True freedom means rejecting the comparison trap. Living within your means and refusing to fund a lifestyle for an audience is the most powerful financial decision you can make.
Citations and References
- Reserve Bank of India (RBI) — "Sectoral Deployment of Bank Credit," monthly bulletin data on Other Personal Loans and credit card outstanding, 2025.
- RBI — "Trend and Progress of Banking in India," report on credit card NPAs and five-year NPA growth trajectory, 2024-2025.
- Jefferies Equity Research — "Indian Weddings: The Big Fat Spending," report estimating average wedding expenditure and comparison with per-capita GDP and education spending, 2024.
- Amazon India — Great India Sale consumer insights, smartphone purchase data and BNPL adoption rates, 2024.
- Flipkart — Big Billion Days sales data, Pay Later transaction growth figures, 2024.
- CIBIL / TransUnion CIBIL — Consumer credit behaviour reports, Gen Z borrowing patterns, and impact of credit history on loan eligibility and interest rates, 2024-2025.
- Fintech lending platform reports — Aggregated data on average loan ticket size (~9,700 rupees), portfolio distribution (91% under 50,000 rupees), and user demographics (60% Gen Z), 2024-2025.
Disclaimer: This article is for educational and informational purposes only. It does not constitute financial advice. Please consult a qualified professional before making any borrowing or investment decisions. Also, this content was generated by DeepSeek AI and should be independently verified for factual accuracy before citing or relying on specific claims.
Lessons in Investing All Posts by Ankur Warikoo « Previously
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