Credit card industry suffers rare cancellations
The credit card industry apparently suffered a rare and sudden cancellation in October, posing new challenges for a market trying to attract more spending.
The active credit card base in October fell by more than 62,000, which industry analysts called “rare” but concerning. The card base stood at 1,894,128, up from 1,856,191 in September.
Most cancellations (nearly 62,000) were made on cards accepted worldwide, while locally accepted card cancellations were lower at 150.
Despite the cancellations, the outstanding balance of all cards at the end of October was Rs. 124.2 billion, up from Rs. 121 billion in September and Rs. 117 billion at the end of last year. The outstanding cards accepted worldwide stood at Rs. 88.3 billion, against Rs. 86 billion in September and Rs. 84.5 billion at the end of 2020.
Some analysts have believed the cancellations were the result of dwindling wealth among credit card users amid the economic crisis caused by the pandemic and rising defaults or dues. Others have claimed that stricter rules and new limitations on what you can spend and how much you can spend through cards online or in person was the cause.
Nonetheless, along with seasonal sentiments, all credit cards have multiplied their offers to attract national spending ranging from vacations, dining and shopping.
Last year, the value of credit card transactions stood at Rs. 222 billion, up from Rs. 277 billion in 2019. The number of transactions decreased to 44.7 million from 51 million in 2019. However, the Use value of credit cards is higher than that of debit cards (210 billion rupees in 2020), while the number of debit card transactions is higher with 75 million transactions.