07/04/2025
India’s credit card spending declined to a seven-month low in February 2025, falling to ₹1.67 trillion from ₹1.84 trillion in January, according to the Reserve Bank of India (RBI). This decline comes amid rising household debt and slowing salary growth, which has lagged behind inflation, making discretionary spending more challenging for many Indians.
Credit Card Issuance Slows Down
Credit card issuers have slowed down their aggressive expansion, issuing only 0.44 million new cards in February, which is less than half of the 0.81 million cards issued in January. In contrast, December 2024 saw nearly 1.10 million new cards added.
The total number of credit cards in circulation stood at 109.31 million in February, slightly up from 108.87 million in January. Compared to February 2024, when the number was 100.60 million, this marks an annual increase of nearly 9 million cards.
Leading Banks Report Declining Transactions
Major credit card issuers, including HDFC Bank, SBI Card, and ICICI Bank, witnessed a decline in transaction values in February. HDFC Bank’s transactions dropped from ₹50,664.04 crore in January to ₹46,378.18 crore in February, marking an 8.5% decline. ICICI Bank saw a sharper fall, with transactions slipping from ₹35,681.6 crore to ₹30,990.86 crore, reflecting a 13.1% decrease. Axis Bank recorded a 6.6% drop, with transactions falling from ₹20,212.17 crore in January to ₹18,884.27 crore in February.
Similarly, SBI Card’s total transactions declined from ₹28,976.68 crore in January to ₹26,175.55 crore in February, registering a 9.6% drop.
The pace of new credit card issuance also slowed down among top banks. HDFC Bank issued 178,000 new cards in February, significantly lower than the 300,000 issued in January. SBI Card followed a similar trend, adding 182,000 cards in February, compared to 240,000 in January.
Key Reasons for the Decline
One of the major reasons for the decline in credit card spending is the growing stress on unsecured loans and rising household debt. Many households are struggling with debt burdens, as salary growth has failed to keep pace with inflation. Additionally, new-to-credit (NTC) consumers—a key segment driving loan demand—saw a 21% year-on-year drop in loan originations, according to a TransUnion Cibil report.
The slowdown is also evident in online transactions, which form two-thirds of total credit card spending. According to Kotak Bank, online spending saw a steeper decline than offline spending in February. E-commerce payments dropped from ₹1.15 trillion in January to ₹1.05 trillion in February.
Meanwhile, point-of-sale (PoS) transactions also saw a sharp decline, falling from ₹69,429.4 crore in January to ₹62,124.91 crore in February. This suggests that consumers have cut back on discretionary spending, likely due to financial uncertainty.
Outlook for the Credit Card Market
The continued decline in credit card spending reflects broader economic challenges, including weaker job growth, lower salary increments, and higher household debt burdens. If these trends persist, banks may tighten their lending criteria further, potentially leading to lower consumer spending and slower economic growth in the coming months.