The saying might be old, but it resonates today, more than ever before. Families worldwide are facing a silent struggle that often goes unnoticed. For most middle-class families worldwide, a month doesn’t begin with hope or planning. It begins with anxiety. The salary comes in and is almost immediately spent. EMIs paid, credit card debt cleared. By the time it’s all said and done, there is barely enough to run the household. And the most interesting part is that most of these loans are given by private digital lenders, not the “big banks” people have come to hate. This trend is applicable to families and many countries alike.
The Debt Loop for Nuclear Families
Middle-class, nuclear families are the ones most severely affected by this phenomenon. According to the Economic Times, digital lenders in India disbursed approximately $10.6 billion in the first half of FY 2025, accounting for approximately 74% of personal loans by volume. The same outlet also reported that nearly 66% of these lenders are under 35 and borrow an average of ₹9,786 ($120), indicating high demand for microcredit. The situation has worsened to the point that, according to PwC and Perfios, approximately 39% of Indian household income is allocated to EMI or debt repayment. This is a constant loop with no way out. At the centre of the loop are fintech leaders, who, according to Money Control, account for approximately 76% of all personal loans by volume in FY 25.
The situation is similar elsewhere. As of Q3 2025, 25.9 million Americans had personal loans, up 7% from the previous year, totaling $269 billion, with 3.52% of accounts 60+ days overdue. US household debt reached $18.39 trillion in mid-2025, with credit cards nearly $1.21 trillion and increasing. Experts believe credit cards, alongside mortgages and personal loans, are the main debt sources, with 46% of Americans carrying balances and about 23% believing they’ll never fully pay them off. Notably, private credit firms generated $136 billion of this debt, up from around $10 billion in 2024, according to the Financial Times.
Europe isn’t far behind when it comes to the debt trap. According to the Eurofinas Biannual Survey, European consumer credit providers lent around $304.5 billion in the first half of FY 2025. Of this, approximately 29% are personal loans, and approximately 30% are revolving credit, such as credit cards, BNPL, and other EMIs. In the UK, the defaulters account for 3.9% of the total accounts. The Guardian noted that nearly 2.7% of Britons cannot afford electricity and gas, not as a loan but as a day-to-day obligation to sustain life.
This paints a stark picture of how a means of prosperity has become a pathway to bankruptcy for many people worldwide. However, this trend is not limited to families and individuals; it also plagues international lending between states.
Nations in the Abyss
Nations aren’t immune. Post-2008, financial influence became a new chessboard, with China’s foreign lending as a key piece. According to AidData’s 2025 dataset, China’s overseas lending and grants total about $2.2 trillion across nearly 200 countries, surpassing many Western lenders and reshaping global finance. Much of this was through the Belt and Road Initiative, which issued over $50 billion in new loans in 2016 alone. Now, the focus shifts from new credit to repayment. The Lowy Institute projects that in 2025, developing countries will pay around $35 billion in debt service to China, with the 75 poorest paying about $22 billion, forcing fiscal trade-offs. For the first time in decades, China is receiving more repayment money than it lends, marking a key change in its economic behavior.
In Pakistan, large Chinese roll-overs have repeatedly absorbed foreign reserves, constraining social and development spending. Sri Lanka experienced a sovereign default and creditor restructuring following the depletion of its finances by BRI-linked projects. Small states like the Maldives now carry high debt ratios, while Kenya and other African countries repay more than they borrow, limiting public investment. Meanwhile, U.S. aid of about $71.9 billion in 2023, mainly grants and multilateral programs, has lessened concessional financing gaps that China now fills at a strategic cost. Every dollar borrowed now also increases leverage.
A World Crushed Under the Weight of Debt
What was once considered a faraway possibility is now becoming a dark reality. Even people living in the world’s most prosperous economies are burdened by debt and increasingly find it difficult to live debt-free. For countries, it’s a new kind of colonialism, where power isn’t imperative, but economic prosperity is. The strong are showing the boot to the weak, and the cycle keeps continuing.
