Some real risks with keeping credit cards and how to mitigate them?

Keeping credit cards brings convenience, rewards and short-term liquidity, but it also creates real risks if you don’t treat them like small, powerful pieces of financial infrastructure. For Indian cardholders the threats include fraud (online and physical), identity misuse, accidental overspending and data exposure through merchants or apps. The good news: most of these risks are manageable with a mix of behaviour, bank-provided protections and simple technology choices. Here’s a practical guide to the real risks and how to mitigate them in the Indian context.

One of the biggest and most visible risks is card fraud—unauthorised transactions whether online, at ATMs or through lost/stolen cards. India has seen waves of digital payment fraud and the RBI and banks have stepped up measures, but fraud hasn’t vanished: criminals pivot quickly, and incidents can be large in value even if case counts fall. The single best habit to reduce damage is prompt reporting: Indian banks are required to block lost or stolen cards immediately on receiving notification, and doing so quickly can prevent further unauthorised use. Make a note of your bank’s 24x7 lost-card helpline and the in-app blocking option; most major issuers provide instant block/unblock via mobile banking. Reserve Bank of India+1

A second risk is data leakage from merchants and apps. Historically merchants stored full card numbers (“card on file”), which created a honey pot for criminals when a merchant was breached. RBI’s tokenisation rules changed the landscape: card details saved with merchants must be replaced by tokens—unique codes that cannot be used outside the specific app or device—so even if a merchant is compromised the attacker gets a token, not your 16-digit number. Wherever possible, prefer tokenised options: use wallets, saved cards only where tokens are used, and favour merchants and apps that explicitly state they use tokenisation or card vaulting by the card network/issuer. Also periodically purge saved cards you don’t use. Reserve Bank of India+1

Simple data-theft vectors—phishing calls/SMSes and fake websites—remain effective in India. Never share OTPs, CVV or full card numbers on a call or in response to an SMS, however official the caller sounds. Banks and card networks will never ask for your full OTP or CVV to “verify” a transaction. If you receive a suspicious call, hang up and call your bank’s official number from its website or app. Use caller-ID-aware fraud tools if your phone supports them, and verify payment links before clicking. Train family members, especially older relatives, because social-engineering scams often target them. (This is behavioural prevention rather than a tech fix, but it prevents the majority of account takeovers.)

Overspending and interest risk is a personal-finance threat that’s easy to underestimate. Credit cards make it painless to buy now and pay later, but high interest on unpaid balances and late fees can turn a small EMI into a crushing liability. Treat your credit card like a short-term loan: set a monthly budget for card spends, enable SMS/e-mail alerts and use automatic EMIs or scheduled payments to clear at least the minimum on time. If a big purchase is planned, check whether converting it to an issuer EMI (with known interest and tenure) is cheaper than rolling high revolving interest. Most issuers let you convert transactions to EMIs or set up reminders through their apps. Manage credit utilisation—keeping usage under 30–40% of your total sanctioned limit helps your credit score and reduces the chance of overleveraging.

Physical card theft and skimming are rarer in India now thanks to EMV chips and contactless technology, but they still happen. Don’t let your card out of sight at restaurants; avoid ATMs in dimly lit, isolated spots, and shield the PIN when you type it. Consider using virtual cards for high-risk online merchants or one-time payments—many Indian issuers and wallets provide virtual card numbers that expire after a single use or can be locked. If your card is lost or you notice suspicious transactions, use the instant block option in your bank’s app and follow up with a formal report; banks are expected to block cards on request and investigate. HDFC Bank+1

Technical mitigations you should enable now: (1) Two-factor authentication and transaction OTPs for sensitive operations—never disable them; (2) contactless/NFC limits—set lower tap-and-go limits in your app if available; (3) spend and merchant controls—many issuers let you restrict e-commerce, international, or contactless transactions from the app; (4) alerts—enable real-time SMS and app push notifications for every transaction; and (5) tokenisation and card-on-file audits—review and delete stored cards in merchant apps you no longer use. Tokenisation is now standard under RBI rules and reduces merchant-side risk substantially. Reserve Bank of India+1

Finally, prepare for the worst. Keep a photo of the front/back of your card (or note down issuer, last four digits and customer-care number) in a secure place so you can report loss quickly. Check your monthly statement and transaction history weekly; if you see anything unfamiliar report it immediately. If fraud occurs, file a complaint with your bank and ask about zero-liability policies—most issuers protect customers who report unauthorised transactions quickly and follow required procedures. If your bank’s response is unsatisfactory, escalate to the nodal officer and then the Banking Ombudsman or RBI grievance channels. Public bodies and banks are increasingly responsive to cyber-fraud complaints in India, and early escalation helps. ICICI Bank+1

In short: the convenience and rewards of credit cards are worth keeping, but they demand active management. Use tokenisation-friendly merchants, enable every security toggle your bank offers, treat OTPs/CVVs as sacred, set budgets and payment automation, and keep quick-reporting channels handy. Those steps will remove or greatly reduce the real risks so you can enjoy the upside without the stress.