In the United States, credit is a way of life. From groceries to graduate degrees, borrowing is stitched into the fabric of American consumerism. Over
82% of US adults hold at least one credit card and the average cardholder carries four. Credit scores influence everything—from mortgage rates to job applications—marking a deeply embedded culture that took decades to build. As of
March 2024, the total outstanding revolving consumer credit in the US stood at US$1.34trn (trillion).
India, by contrast, is in the throes of a credit revolution. Once culturally averse to borrowing, the country is witnessing an extraordinary transformation in how its citizens perceive and use debt. While only
about 5.5% of Indians (about
77mn- million) currently own credit cards, the pace of adoption and innovation suggests this is changing rapidly. From 2012 to 2025, loan growth in India averaged
11.8%, peaking at 20.80% in December 2023, and the numbers are likely to go up. This divergence in credit cultures—one mature and deeply institutionalised, the other nascent and aspirational—says much about how financial identity is constructed in both nations.
The American Credit Ecosystem: Born in the Age of Consumerism
The roots of the US credit system can be traced back to the 1950s, when Diners Club introduced the first general-purpose charge card. It was a product born out of post-war prosperity and suburban expansion. As incomes rose and consumer goods became more accessible, Americans embraced instalment payments and revolving credit. Over time, banks entered the market aggressively, especially in the 1970s and 1980s, with the introduction of credit scoring models like FICO—enabling risk-based pricing and mass-market lending.
This infrastructure was critical in shaping what is now a
US$1trn credit card market. Yet it also embedded financial risk. Easy access to credit became synonymous with personal freedom and economic power—but not always with responsibility. The 2008 subprime mortgage crisis exposed the perils of unchecked lending and over-leverage, forcing a regulatory reckoning. Still, the US has retained a fundamentally pro-credit culture, where borrowing is often viewed as a strategy for financial advancement rather than a liability.
India: A journey from Caution to Consumption
India’s trajectory could not be more different. For much of the post-independence era, debt was considered taboo. Families prioritised saving, and consumer credit was limited to essentials like homes or education, often financed through government banks or non-banking financial companies (NBFCs). The idea of borrowing for discretionary consumption was alien to most Indians well into the 2000s. That began to change with the liberalisation reforms of 1990s and the rise of private banks. As digital payments boomed and e-commerce exploded, India’s younger consumers—particularly in urban centres—embraced products like credit cards, personal loans and, more recently, buy now pay later (BNPL). Between 2019 and 2024, the number of active
credit cards in India nearly doubled from 55mn to 100mn. Digital lenders and fintechs have expanded access by offering frictionless onboarding and real-time credit assessments, targeting a tech-savvy, aspirational demographic.
Crucially, India’s credit growth is being driven not just by affordability but by aspiration. Millennials and Gen Z are leading this charge—accounting for over
43% of new retail loan inquiries in 2023. EMI schemes, interest-free payment windows, and instant credit at point-of-sale have made it easier for consumers to spend today and pay tomorrow. The shift is psychological as much as financial: borrowing is no longer viewed with suspicion, but with optimism.
Where the Cultures Diverge—and Converge
Despite the surge in India’s credit landscape, fundamental differences remain. The US has an entrenched revolving credit system, where minimum payments, interest accrual, and long-term balances are common. This model encourages usage but also invites debt traps. India, meanwhile, remains more cautious. Credit utilisation rates are lower, and while defaults are rising, especially in unsecured segments, the average Indian consumer still leans conservative compared to their American counterpart.
Yet convergence is inevitable. Indian fin-tech’s have drawn inspiration from US giants—adopting credit scoring models, launching BNPL services, and even mimicking marketing language around 'credit empowerment.' Simultaneously, US firms are
learning from India’s mobile-first financial innovation.
American lenders are increasingly looking at biometric-based KYC and real-time underwriting systems that originated in India’s
digital public infrastructure. Still, cultural values exert a strong influence. In India, family support systems and social norms act as a buffer against over-borrowing. In the US, the culture of individualism and self-financing promotes independence, but also makes consumers more vulnerable to financial shocks.
A Tale of Two Futures
The US credit system is at an inflection point.
Delinquencies are rising in certain segments, and younger consumers, saddled with student loans and high housing costs, are increasingly wary of traditional debt. For instance, the student loan delinquency rate hit
11.4% in early 2024, the highest in over a decade. There is a growing call for more responsible lending, transparency in BNPL offerings and enhanced financial literacy.
India, on the other hand, stands on the edge of explosive credit expansion. But this must be tempered with caution. As more first-time borrowers enter the market—the number of new retail loan accounts increased by
18% year-on-year (y-o-y) in 2023—the 2023—the need for regulation, education, and ethical lending practices becomes paramount.
Ultimately, both nations can learn from each other. The US offers lessons in infrastructure and innovation, but also in excess. India brings to the table prudence and adaptability, albeit with the challenge of scale and inclusivity. The future of credit in both countries will depend not just on access, but on how responsibly that access is wielded.
(Sumit Malhotra is a New York based credit investor specializing in Fintech and Specialty Finance investments across geographies. He is an alumnus of University of Virginia, USA and IIT Bombay, India. He has held key positions at prominent institutions, including JP Morgan, Moody’s, Deutsche Bank, WebBank & Intuit. His LinkedIn is: https://www.linkedin.com/in/sumitmanu)
