Credit card spending more than doubled on a yearly basis in May to hit ₹1.14 trillion.- The amount of money customers spent online through
credit cards was almost double to that of swiping. - Analysts believe the data points indicate that the retail economy is strong but the current trends may not be sustainable.
Moreover, the amount of money customers spent online through credit cards was almost twice that of swiping.
Banks with highest spend per card per month
It seems like inflation is neither stalling the shopping, nor are high interest rates worrying credit card holders. The banking ecosystem added 1.7 million new credit cards in the month of May.
Large lenders such as HDFC Bank, SBI, ICICI Bank and Kotak Mahindra saw strong growth as they issued lakhs of new credit cards in the month.
Meanwhile, Indusind Bank continued to hold the highest spend per card across sale points at ₹30,861 followed by South India Bank at ₹22,933 and American Express at ₹22,178, as per report by IDBI Capital
In terms of highest no of transactions per card, South India Bank held the top rank followed by Citi Bank and Federal Bank.
Credit card spending to become expensive
In the last two months, RBI raised the interest rates by 90 basis points. In May, RBI hiked the repo rate by 40 basis points and further increased it by 50 basis points in June. With this, RBI's policy repo rate currently stands at 4.90%.
The data points indicate that the retail economy is strong but the current trends may not be sustainable with interest rates expected to rise rapidly in the next few quarters, a Macquarie report said according to several media reports. It means credit would become expensive.
However, a few believe that consumers may not stop spending. “Spends remained strong and continued their healthy momentum over May 2022, led by the rising share of e-commerce transactions, which will keep growth in spends buoyant,” said a Motilal Oswal report.
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