Credit Card Spending Soars 25% In September, Driven By Festive Demand

According to the latest data from the Reserve Bank of India (RBI), September spending reached Rs 1.76 trillion, up from Rs 1.42 trillion in the same month last year

Experts attribute this strong growth to increased festival demand and a favourable base effect

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Credit card spending in September saw robust growth of 25 per cent year-on-year (Y-o-Y), the highest increase in six months. This surge comes despite many banks reporting higher slippages during the July-September quarter of 2024-25, with spending growth surpassing 20 per cent for the first time since February.

According to the latest data from the Reserve Bank of India (RBI), September spending reached Rs 1.76 trillion, up from Rs 1.42 trillion in the same month last year. In August 2024, credit card spending stood at Rs 1.68 trillion.

Experts attribute this strong growth to increased festival demand and a favourable base effect.

“The growth in credit card spending is driven by a lower base in the previous year and the festival season. There has been an increase in promotional schemes like equated monthly instalments during the festival period. Looking ahead, October is also likely to see a rise in spending due to the festival season and associated promotional activities,” said Saurabh Bhalerao, head of BFSI research at CareEdge Ratings, reported Business Standard.

“The growth appears healthy at this point. The early start of the festival season contributed to a pickup in spending during the second half of the month. We estimate industry spending to grow in the high teens for the financial year, and trends in the coming months will be crucial to assess the overall trajectory,” said Nitin Aggarwal, research analyst at Motilal Oswal Research, states the report.

Some private banks have reported an increase in stress within the credit card and microfinance segments for the July-September period.

“On the credit card front, as we guided for in the last call, certain segments are showing early signs of stress and indebtedness. We have taken actions, including limiting the number of new cards issued and managing our existing portfolio,” said Arjun Chowdhury, group executive (affluent banking, NRI, cards/payments, and retail lending) at Axis Bank during the post-earnings call. 

HDFC Bank, the largest credit card issuer, reported a remarkable 35 per cent increase in spending to Rs 52,226.59 crore, up from Rs 38,661.8 crore in September 2023.

SBI Cards and Payment Services (SBI Card) saw an 11 per cent rise in transactions, reaching Rs 27,714.7 crore, while ICICI Bank experienced a 24 per cent increase to Rs 31,457 crore. Axis Bank recorded a 15.1 per cent growth, totalling Rs 18,721.9 crore.

The growth rate of cards in circulation has steadily declined, dropping from nearly 20 per cent year-on-year in January 2024 to 14 per cent in September 2024.

Despite the uptick in spending, the growth rate of outstanding credit cards is slowing. The total number of credit cards in circulation rose 14 per cent YoY to 106.11 million, up from 93 million in September 2023. HDFC Bank leads with 22.4 million cards, followed by SBI Card with 19.5 million, ICICI Bank with 17.56 million, and Axis Bank with 14.79 million cards.