The access to credit cards and other sources of such unsecured personal loans has enabled consumers to avail of a good or service ‘at the speed of thought’ while opting to pay for such consumption later in time. This often leads to an increasing amount of accumulated unsecured debt across society. Unsecured debt refers to loans that are not backed by collateral assets, allowing borrowers to consume without significant repercussions flowing from a default while simultaneously exposing lenders to the higher risk of potential default. Given the lure of overconsumption, it is essential to understand and analyze the consequences of such easy and ready access to credit.
The consequences of such access to credit could be positive in the short run for the borrower concerned, as the purchase could be utilized productively. The consumption could also contribute to economic growth and employment in the short run [1]. However, easy access to unsecured credit and eventual default might impose adverse effects on the collective. Use of credit cards and such other instruments poses significant risks to consumers’ long-term financial situation, as the debt is intended to be repaid through allocating income yet to be earned. If the consumer were to default on such unsecured debt, the lender might be left with few options to recover the outstanding debt owed. In this sense, such debt seems to be the most volatile form of debt and poses the greatest risks to lenders [2]. Apart from the increased financial risks and stress on consumers and lenders, in the medium-term, unsecured debt is projected to have unfavorable effects on the economy and ultimately the natural environment on a broader level.
Unsecured debt helps the consumer realize the desire to acquire goods or to enjoy services or to take vacations despite not having sufficient financial resources for such enjoyment of products or services. The consequences of the apparently insatiable desire for consumption have been evident in recent years. Even though there might be no immediate need for a specific purchase and one might not be able to afford it, the combination of the appeal of unsecured debt, the ease of online shopping, and the projection of material possessions on social media has made it easier for most consumers to participate in this trend. Individuals frequently succumb to peer pressure or seek validation through the products they purchase. Unfortunately, this has led to overconsumption, with production responding in tandem, and consequently, resulting in a rapid use-up of ecological resources [3]. For instance, “fast fashion” has meant and implied the unrelenting production and inefficient use of textiles that would apparently be sufficient to drape the next six generations. Though this statistic might be largely unverifiable, it serves to convey the extent of the problem at hand.
Increasing unsecured debt and evolving patterns of global consumption indicate a concerning trend. In India, the world’s most populous nation, for instance, Domestic Material Consumption (DMC) grew from 7.5 billion tonnes in 2019 to 8.84 billion tonnes in 2024, indicating a 17.8 per cent increase over the 5-year horizon. DMC covers aspects such as trade, industry, business and entrepreneurship, material resources and the scale of efficiency. DMC per capita experienced a growth of 12.9 per cent, from 5.4 to 6.1 tonnes per capita over the same time period [4, 5]. During the same time period, the outstanding credit card debt in the country rose from $ 12.65 billion in March 2019 to $ 32.39 billion in June 2024 [6]. Though not all of the credit card debt might be unsecured and not all of the outstanding debt is likely to result in defaults, the growth might indicate expanding credit access to marginal borrowers and, consequently, an increase in risk exposures of the lenders.
Eventually, when the consumer is mandated to repay such unsecured debt, said consumer’s resources depend upon prevailing financial conditions, the family’s economic resources, and in some cases, even the state of the economy. If said borrower were unable to keep up with the repayment schedules, such an accumulation of debt suggests a growing gap between consumption and financial accountability of the consumer. However, consumers from different financial backgrounds and economic classes may have different experiences and risks of debt [2]. Managing such debt can indirectly influence the consumption patterns and financial decisions of the population in general. If significant numbers of consumers were to default on their loans, such defaults could lead to increased non-performing assets for banks and financial institutions, threatening economic stability [10] while imposing additional costs on the honest borrowers repaying their debts as scheduled. This might ultimately affect the design of regulations relating to access to and repayment of unsecured debt.
Consuming without contemporaneously paying for such consumption can lead to high costs in the future as the mounting debt has to be cleared or has to be written off by the lenders (“a haircut”). This can lead to a decrease in the buying power of consumers while also limiting economic growth and disrupting economic stability in general [10]. If such growth in consumption rates were projected to persist, finite natural resources are likely to be exploited and consumed, while unmanageable amounts of waste are slated to be produced and accumulated, and our natural ecosystems are stressed and pushed into irreversible deterioration [8].
Identifying the patterns of environmental degradation linked to consumer behaviour is critical. Given that unsecured debt lets society utilize the resources with limited financial accountability, the estimated increase in the consumption of clothing (“fast fashion”), electronics (“planned obsolescence”), personal care products (“keeping up with trends”), and other non-essential items is quite alarming. The high consumption rates severely contribute to material waste, greenhouse gas emissions, energy use, and eventually to ecosystem collapse. If one were to default on paying for one’s own consumption, the burden is distributed across all members of society. It is therefore vital to grasp the full extent of the impacts of such untethered consumption on civil society all the way through to the global environment [8].
Almost every step involved in the production and consumption cycle contributes to energy and resource use and consequently to the change in climate and environmental degradation. The United Nations notes that even though such changes to our global environment could occur naturally due to events such as a large volcanic eruption, in the present context, human activity is the primary factor for the adverse changes to our climate [11]. An instance of such “human behavior” is the impulsive purchase of goods funded by unsecured debt. While unsecured debt doesn't directly cause environmental deterioration, the financial stress and behaviors associated with accumulating such debt may ultimately lead to deterioration of the environment. As much of the damage caused to the environment in the past might be irreversible, members of civil society can be more conscious about consumption patterns and purchase habits by tracking credit card usage and such, by setting budgets, and through prioritizing essential purchases ahead of vanity.
References:
[1] Valckx, N. (2017, October 3). Rising Household Debt: What it means for growth and stability. IMF Blog. https://www.imf.org/en/Blogs/Articles/2017/10/03/rising-household-debt-what-it-means-for-growth-and-stability
[2] Hodson, R., Dwyer, R. E., & Neilson, L. A. (2014). Credit card blues: The middle class and the hidden costs of easy credit. Sociological Quarterly, 55(2), 315–340. https://doi.org/10.1111/tsq.12059
[3] Sierra, B. (2023, December 9). The Psychology of Consumption: Decoding what drives our purchasing behavior — The Sustainable Fashion Forum. The Sustainable Fashion Forum. https://www.thesustainablefashionforum.com/pages/how-psychology-impacts-consumer-behavior
[4] Material consumption, OECD. https://www.oecd.org/en/data/indicators/material-consumption.html
[5] India - Demographics, Data Commons.https://datacommons.org/place/country/IND?category=Demographics
[6] TOI Business Desk. (2025, June 15). Credit over caution: Household savings in India fall to 18.1% of GDP; more Indians rely on credit to fund expenses. The Times of India. https://timesofindia.indiatimes.com/business/india-business/credit-over-caution-household-savings-in-india-fall-to-18-1-of-gdp-more-indians-rely-on-credit-to-fund-expenses/articleshow/121862685.cms?utm_source=chatgpt.com
[7] Credgenics. (2024, September 4). Why the rise in unsecured credit is a concern for the RBI - Blog. Blog. https://blog.credgenics.com/rbi-concern-unsecured-credit/
[8] Vega, Emma, "The Abyss of Abundance: Consumer Overconsumption and the Road to Environmental Collapse" (2024). Student Theses 2015-Present. 160.https://research.library.fordham.edu/environ_2015/160
[9] United Nations Statistics Division. (n.d.). — SDG indicators. https://unstats.un.org/sdgs/report/2025/
[10] Quina, M., & Logan, A. (2020, July 29). Credit cards. Science Technology and Society a Student Led Exploration. https://opentextbooks.clemson.edu/sciencetechnologyandsociety/chapter/credit-cards/#:~:text=Through%20techniques%20that%20credit%20card,habit%20can%20lead%20to%20debt.
[11] United Nations. (n.d.). What is climate change? | United Nations. https://www.un.org/en/climatechange/what-is-climate-change