Credit card spending reached Rs 2.02 lakh crore in October 2024, showing a growth of 14.5% over September and 13% over the previous year. This increase is mainly due to shopping during the holiday season. However, the total number of credit cards registered a marginal increase, indicating cautious growth in the sector.
According to data from the Reserve Bank of India (RBI), the number of active credit cards stood at 106.88 million in October, up 12.85% year-on-year and 0.74% higher than in September. The net growth of credit cards in October stood at 7,86,337, showing a marginal improvement over September (6,20,000) and August (9,20,000).
Decrease in the issuance of new cards
Despite the holiday spending, new credit card issuances experienced a sharp drop. The number of newly issued cards decreased by 45% year-on-year to 7,80,000 in October 2024, compared to 1.6 million in the same month last year. This decrease is due to the adoption of stricter standards by credit providers and the increased risk of default.
Change in spending patterns
A significant change in credit card spending patterns was also observed. E-commerce transactions accounted for 61% of total spending in October, up from 65% in September, while the share of point-of-sale (PoS) transactions rose to 39%, up from 35% in September. PoS surpassed e-commerce in total transaction volume, accounting for around 51% of total transactions.
Total transaction volume grew 35.4% to Rs 4.33 lakh crore in October, reflecting changing consumer preferences and spending patterns.
Non-payment and credit management
Although spending has increased, growing stress on unsecured loans has put credit providers on alert. Credit cards have the highest default rates compared to other credit categories. Private banks recorded a significant rise in non-performing assets (NPAs) in this category in the July-September quarter. In response, credit providers tightened credit rating requirements and lowered spending limits to reduce risk.
performance of major banks
HDFC Bank added the maximum number of new credit cards with 2,41,119 in October, while SBI Cards added 2,20,265 and ICICI Bank added 1,38,541 cards. On the other hand, Axis Bank reduced its cards by 20,573.
The holiday season has temporarily increased credit card spending, but the industry’s growth rate is likely slower than last year. With changing trends, credit providers are focusing on maintaining a balance between risk management and growth.
