 "Rewards galore: Most loved credit cards for online spends in India")
Even though UPI is eating into the debit card market, India is on track to achieving the 100 million credit-card milestone this year as credit cards in force (CIF) reached a record high in April 2023 with 86.5 million cards in circulation, according to a report by Bankbazaar.
Data from the Reserve Bank of India reveals that in April 2023, India had over 8.6 crore credit cards in play. This number has shot up by about 15% over April 2022 when it was 7.5 crore. In terms of market share, the biggest gainer was Axis Bank, which benefited from the Citi acquisition. Just four banks-HDFC Bank, ICICI Bank, SBI and Axis Bank account for 71% of all credit cards in April 2023.
"Credit-confident Indians are flipping out their credit cards for big-ticket purchases, encouraged by reward points, cashback, no-cost EMIs, and premium lifestyle rewards", noted the report. In April 2023, the industry average was Rs 5120 per transaction. The industry average monthly spend per card was Rs 15,388.
Are debit cards losing out?
When it comes to big and mid-sized spends like travel, electronics, dining, or shopping, people love their cards for the rewards it gives them.
But on small transactions such as grocery spends, they prefer UPI, which, too, has grown tremendously. In April 2023, UPI moved over Rs 14 lakh crore over 886 crore transactions — averaging nearly Rs 1600 per transaction. Last April, UPI had moved Rs 9.8 lakh crore over 558 crore transactions,
Credit card use has overtaken debit card use in April 2023, with 25 crore merchant card transactions compared to 22 crore in April of last year.
Credit card use has overtaken debit card use in April 2023, with 25 crore merchant card transactions compared to 22 crore in April of last year.
"This means the debit card is losing out. Though we saw 4.6 crore debit cards being added to the market taking the total to 96 crore, transactions are falling hard. The debit card moved just under Rs 55,000 crore (down 16%) over 23 crore transactions (down 30%) in the last one year," said Adhil Shetty, CEO of BankBazaar.
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He expects credit cards outstanding and average spends to go up and peak this fiscal during the Diwali month of November. "More young Indians will buy their first credit card, and credit-wise Indians will upgrade to premium cards," said Shetty.
While CSB, South Indian Bank, Federal Bank are the most frequently used cards on average, with around 4 spends per month per card, Karur Vysya, IndusInd, CitiBank account for highest monthly spends per card of over Rs 27,000.
CitiBank, Amex, IndusInd account for the highest online spends as a percentage of their from their total spends, with over 70% of all their transactions being online.
Digital rewards: Consumers love these credit cards for online spends
Digital rewards: Consumers love these credit cards for online spends
Why consumers love digital convenience?
A credit card is versatile. You can use it pretty much anywhere. It's convenient and rewarding. You use them for big and mid-sized online spends.
"You get accelerated points, deals, discounts, and cashback. Now, there's a BNPL loaded on your card with no-cost EMIs. With RuPay cards, you can even make UPI payments. Credit cards are also the way the young will continue to initiate and strengthen their credit histories," said Shetty.
These are the cards with the highest spends
These are the cards with the highest spends
How to use your cards smartly:
Shetty shares some tips on how to use and choose your card
Avoid Minimum Payments
Pay your card dues in full. Rolling over your dues attracts interest, often at the rate of 40% a year.
Never Be Late
A single late credit card payment can bring your credit score down by a 100 points.
Keep Your Utilisation Low
Stay at 30% of your spending limit. Go over it when you're confident of full and timely repayment.
Know Your T&Cs
Know the fees, penalties, and terms and conditions of your card.
Protect Your Details
Safeguard sensitive credit card data such as card number, expiry date, CVV, and passwords.
Secure Your Card
Keep it physically safe. Never leave it unattended. If your card is lost, report to the issuer ASAP.
Monitor Your Statements
Regularly review your credit card statements for any unauthorized transactions.
Beware Of Phishing
Beware of suspicious emails or calls asking for sensitive financial information.
8.65 crore credit cards and each bank's share in a snapshot:
How to choose the right card?
8.65 crore credit cards and each bank's share in a snapshot:
How to choose the right card?
Low Income? No Credit History?
Take a credit card against a fixed deposit. Many banks offer this. The terms and conditions vary from one bank to another. The fixed deposit required will be Rs 10,000 or higher. Your spending limit can be up to 100% of the deposit. Annual charges may apply.
Recently Employed?
Go online to check your preapproved offers. Your bank may have one basis your income. The young prefer lifetime free cards. Take one that helps you save money and helps you access a preferred lifestyle.
Seasoned Users?
Looking for an upgrade to an existing card? Take a premium card. Their annual fees pay for themselves as gift cards and premium experiences. Take a card that helps you achieve the lifestyle you aspire to, be it fine dining, travel, or premium shopping.
Brand Mascots?
Are you loyal to a brand? Buy a cobrand card issued in partnership with your favourite brand. A cobrand card makes it easier for you to enjoy your favourite brands. For your loyalty, you get accelerated reward points, brand discounts, and premium brand experiences.