Banks in India are shifting their focus from attracting first-time users with free credit cards to using ongoing fee waivers and rewards as strategic tools to retain existing customers and boost spending, amid a rapidly expanding credit card market.
India’s “lifetime free” credit card push has moved beyond a simple hunt for first-time users. By late July 2026, banks were also using permanent fee waivers to stop existing customers from leaving, with The Financial Express reporting that cardholders who ask to close a paid card are increasingly being offered a switch to a lifetime-free version or a waived renewal fee instead. Adhil Shetty of BankBazaar told the paper that customers with steady spending, prompt repayments and a strong banking relationship are often worth retaining because lenders can still earn from interchange, transaction volume and instalment conversions. (financialexpress.com)
That retention logic sits inside a much bigger expansion in card usage. Business Standard reported in May 2025 that RBI data showed credit cards in circulation had climbed to about 10.93 crore by the end of February 2025, up from 5.53 crore in December 2019. The same report used Axis Bank’s tie-up with Flipkart-backed super.money to show how fiercely banks are chasing that growth: the co-branded RuPay card was launched as lifetime free, offered 3% cashback on UPI “Scan & Pay” transactions through the app, 1% on other eligible spending, and a fuel surcharge waiver. super.money founder Prakash Sikaria said the product offered “FLAT 3% cashback”, underlining how the sales pitch has shifted from free ownership alone to rewards on daily digital spending. (business-standard.com)
Banks’ own marketing makes the strategy plain. In an April 2026 explainer, IDFC FIRST Bank said lifetime-free cards are designed to lower the entry barrier for new users and can help first-time borrowers build a credit record while still accessing rewards, EMI conversion and online and offline payments. It listed FIRST Classic, FIRST Millennia, FIRST Select, FIRST WOW! and FIRST Wealth among the cards it describes as free for life, and said some lenders impose spending or usage conditions even when they advertise a lasting fee waiver. (idfcfirst.bank.in)
The appeal, though, is no longer confined to newcomers. Business Standard wrote in May 2026 that no-fee cards had become easier to find and were increasingly popular with online shoppers and salaried consumers across India. The attraction was not just the missing annual charge, but the fact that banks were attaching shopping offers, dining deals, fuel savings and travel benefits to products that once might have been viewed as basic entry-level cards. (business-standard.com)
Moneycontrol’s guide to the category showed how specific that competition has become. It highlighted Federal Bank Scapia for zero forex fees and potential unlimited lounge access, Axis Bank MY Zone for Swiggy discounts, lounge access and reward points, and Edge CSB Bank RuPay via Jupiter for up to 5% cashback on UPI spending plus a fuel surcharge waiver for early users. That is a telling change in emphasis: banks and their partners are no longer merely waiving a fee, they are trying to make lifetime-free cards feel premium, travel-friendly or tightly matched to a customer’s spending habits. (moneycontrol.com)
The snag is that “lifetime free” remains a narrow promise dressed up to sound broader than it is. NewsBytes warned in January 2026 that cardholders can still be charged for cash withdrawals, late payments, foreign-currency transactions, add-on cards and reward redemptions. It gave a simple illustration of how quickly the maths can turn: a ₹20,000 purchase from a foreign merchant could add roughly ₹600 in forex mark-up, enough to wipe out much of the apparent benefit of a no-fee card. The publication urged readers to study the Most Important Terms and Conditions, or MITC, before activating the card. (newsbytesapp.com)
Even some of the organisations selling these cards acknowledge the limitations. Moneycontrol said late fees, cash-withdrawal costs and hidden terms can still eat into the value of a supposedly free card, while IDFC FIRST Bank’s own explainer said late-payment fees, cash-withdrawal charges and EMI processing charges may still apply. In practice, the phrase usually means only that joining and annual fees have been removed; it does not guarantee cost-free borrowing, and in some cases the waiver may depend on maintaining a minimum level of spending or activity. (moneycontrol.com)
For applicants, then, the real comparison is not free versus paid, but simple versus suitable. A traveller may get more value from a zero-forex card than from a dining offer, a heavy UPI user may prefer cashback to lounge access, and a cautious first-time borrower may prize predictable charges over flashy perks. Banks clearly see lifetime-free cards as a way to acquire customers, retain them and deepen the relationship over time. Consumers, however, still need to ask the less glamorous question: after the marketing is stripped away, do the rewards genuinely outweigh the conditions and the charges that survive in the small print? (business-standard.com)
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
