The balminess of the pandemic is setting in as Indians are buying on credit like never before. Credit cards are proving to be more ‘valuable’ for banks and other credit card providers because people prefer to use them for ‘large transactions.’
Pandemic Blues Are Wearing Off
Consumers who were hit by the pandemic prefer to buy in easy installments rather than paying the entire amount upfront.
Credit card outstanding stood at Rs.1.48 lakh Cr while consumer loans touched Rs.27,618 Cr at the end of March 2022. These numbers are higher than pre-pandemic levels.
Online Shell Outs Touch Record High
Spending on credit cards surged at a faster pace of 13% against an 8% growth in FY21.
Bank loans are not far behind as consumer durables like televisions, laptops, and refrigerators jumped by 60% in FY22 compared with a 21% decline in the preceding fiscal.
The Relievers- A recovery in consumer confidence and reviving economic activity is clearly a good sign.
Double The Worth
For every 12 debit cards out there, there is just 1 credit card – but quantity alone is not a good measure of the worth of something.
There’s a lot more to it.
Each credit card transaction is 2x more valuable than a debit card transaction. Despite the fact that credit cards often carry a minimum annual fee, transactions through them are a lot more valuable.
The average credit card transaction value stood at Rs.9,600, while that of debit cards stood at a mere Rs.3,900.
The Takeaway: Brands, especially electronics, are focusing on financing consumers, while Buy Now Pay Later (BNPL) has also been driving sales of premium products.
Too long? Here’s a one-liner: Credit card spending is on the rise as pandemic blues wear off for Indians; online spending via credit cards touches a record high.