Swipe Fatigue? India’s Credit Card Spending Drops 2% in January

Total credit card spending reached Rs 1,841bn in January, marking a 2% Month-on-Month decline but a 14% Year-on-Year growth. According to Asit C. Mehta Investment Intermediates' (ACMIIL) latest insights, the monthly spending contraction basis was primarily due to seasonality effects, as December spending was boosted by festive and year-end expenditures.

Despite a 1% month-on-month (MoM) decline due to the high base of December 2024, the total credit card transaction volume in January 2025 stood at 430 million, reflecting a 31% Year-on-Year (YoY) growth. The slowdown in transaction volume is attributed to increased caution driven by rising delinquencies, the report released on Tuesday highlighted.

Furthermore, the number of outstanding credit cards declined by 1.2 million from the previous month and stood at 109 million in January. The average spending per card decreased slightly by 1% MoM to Rs 16,911, though it registered a marginal 1% YoY increase. The average spend per transaction also registered a 1% MoM decline and a 15% YoY decrease at Rs 4,282, reflecting evolving consumer behaviour and macroeconomic conditions.

“Although the credit card data saw a moderation at an industry level in terms of new card dispatches, card spendings and transaction per card but the leading banks such as HDFC and SBI saw higher card dispatches and consequently leading to market share gain," said Akshay Tiwari, AVP of equity research analyst, BFSI at ACMIIL.

He also highlighted that the mid-sized banks continue to maintain caution and take a pause from their aggressive disbursement of cards.

Market Trends

As per market trends, leading banks continue to strengthen their presence in the credit card segment. The HDFC Bank's market share increased to 21.5% from 20.2% over the past year through aggressive customer acquisition strategies. The State Bank of India also recovered from a dip in market share to 18.8%, adding 240,000 new cards in January and ICICI Bank's share improved from 16.3% to 16.6%.

However, the mid-cap segment showed a mixed picture. While IDFC First Bank increased its share from 2.4% to 3.1% over the past year, Yes Bank’s market share stagnated at 2.2% since September 2024.