India is witnessing a surge in credit cards usage, as more people opt for digital payments and online shopping amid the pandemic.
India is on the verge of crossing the 100-million mark in credit card users, as per the latest data from the Reserve Bank of India (RBI). There were 97.9 million credit cards in circulation as of December 2023, with a record 1.9 million new cards being added in just that one month. This is a significant increase from the 84.8 million credit cards in circulation at the end of December 2022, indicating a growth of 15.4% in a year.
The rise in credit card usage can be attributed to several factors, such as the growing preference for digital payments, the availability of attractive offers and rewards, the ease of access and approval, and the changing consumer behaviour amid the pandemic. Credit cards offer convenience, security, and flexibility to the users, who can pay for their purchases later, avail of interest-free credit periods, and earn benefits such as cashback, discounts, and loyalty points.
According to RBI data, the value of credit card transactions also increased by 18.7% year-on-year, from Rs. 6.02 lakh crore in 2022 to Rs. 7.15 lakh crore in 2023. The average transaction value per credit card was Rs. 6,104 in December 2023, up from Rs. 5,927 in December 2022. The number of credit card transactions also rose by 14.4% year-on-year, from 101.4 crore in 2022 to 116 crore in 2023.
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HDFC Bank, ICICI Bank, SBI cards, and Axis Bank are the leading credit card issuers in India, accounting for over 75% of the market share
The credit card market in India is dominated by four major players, namely HDFC Bank, ICICI Bank, SBI cards, and Axis Bank. Together, they account for over 75% of the total credit cards in circulation, as per the data from the RBI and the respective banks.
HDFC Bank is the largest credit card issuer in India, with 28.8 million credit cards as of December 2023, followed by ICICI Bank with 20.9 million, SBI cards with 13.4 million, and Axis Bank with 10.2 million. These banks have been aggressively expanding their credit card portfolios, by launching new products, partnering with e-commerce platforms and fintech companies, and offering customized solutions to different segments of customers.
Apart from these four banks, other credit card issuers in India include RBL Bank, Kotak Mahindra Bank, IndusInd Bank, Yes Bank, Citibank, American Express, and HSBC. These banks have a combined market share of less than 25%, and face stiff competition from the larger players.
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Credit cards offer multiple benefits to the users, but also entail certain risks and responsibilities
Credit cards are a powerful financial tool that can help the users to manage their cash flow, build their credit score, and enjoy various perks and privileges. However, credit cards also come with certain risks and responsibilities, such as high interest rates, fees and charges, frauds and thefts, and overspending and debt traps.
Therefore, it is important for the credit card users to be aware of the terms and conditions of their cards, and use them wisely and responsibly. Some of the best practices for credit card usage are:
- Pay the full outstanding balance every month, and avoid paying only the minimum amount due or revolving the credit.
- Use the credit card only for essential and planned expenses, and not for impulsive or unnecessary purchases.
- Keep track of the credit card statements and transactions, and report any discrepancies or unauthorized charges immediately.
- Choose a credit card that suits your spending pattern, income level, and lifestyle, and compare the features and benefits of different cards before applying.
- Maintain a low credit utilization ratio, which is the percentage of the available credit limit that you use, and ideally keep it below 30%.
- Protect your credit card details and PIN, and do not share them with anyone or disclose them online or over the phone.
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Credit cards are a convenient and rewarding way of paying for goods and services, and can also help you to achieve your financial goals. However, they also require careful and prudent management, and should not be used as a substitute for savings or income. By following the above tips, you can make the most of your credit card, and avoid falling into any trouble.
Last Updated on 1 month