Despite RBI warnings, credit card spending sees a sharp rise in May 2024

In India, the number of credit cards as well as spending through credit cards is steadily increasing. Whether it’s online shopping, dining at restaurants, booking flight tickets or purchasing fuel, people are increasingly using credit cards for payments.

Credit card spending falls under the category of unsecured loans. Despite warnings from the RBI about the increasing trend of unsecured loans, credit card bills continue to rise. Convenience could be one of the reasons for growing popularity of credit cards. They offer not only in spending but also in earning rewards with every purchase. Over the past few months, this spending has consistently increased, as confirmed by recent RBI data.

For instance, in May 2024 alone, spending through credit cards reached ₹1.65 lakh crore  annually, marking a 17% increase from the previous year. Similarly, the number of credit cards issued annually saw an 18% rise. It increased from 8.74 crore in May 2023 to 10.33 crore in May 2024.

HDFC Bank leads in terms of the number of cards issued, followed by SBI Cards, ICICI Bank, and Axis Bank. As of May 2024, HDFC Bank had issued more than 21.1 million credit cards, with a total spending of ₹4,154 billion. SBI Cards, the second-largest card issuer, had issued over 19.1 million credit cards by the end of May 2024, with expenditures totaling ₹2,643 billion. Followed by ICICI Bank and Axis Bank with over 17 million and 14.3 million cards issued, respectively.

The rise in credit card spending can be attributed largely to online transactions, which surpassed ₹1 trillion in May 2024. Additionally, transactions at Point of Sale (PoS) terminals exceeded ₹638 billion. ATM withdrawals using credit cards amounted to over ₹44 billion.

Overall, despite RBI warnings, banks have not seen any significant impact on credit card spending patterns.