Credit card spending dropped to 7-month low in February: What is in store for plastic money business?

Credit card spending in the country witnessed a seasonal decline in February 2025, registering a 9 per cent month-on-month (MoM) drop to ₹1,672 billion.

This is the lowest registered figure, according to data provided by Asit C Mehta Investment Intermediates Ltd (ACMIIL). However, on a year-on-year (YoY) basis, card spending jumped 12 per cent, even though the increase was slower compared to previous quarters.

Consumer caution and seasonal trends impact spending

On a month-on-month basis, the total number of transactions also dropped by 8 per cent to 396 million. This clearly demonstrates moderation in consumer expenditure. It also marks the weakest YoY growth in the last 14 months, with transactions up by 27 per cent compared to February 2024.

Further, the average spending per transaction also declined from ₹4,282 in January to ₹4,219 in February, depicting a more cautious approach by consumers with regard to spending.

It has been observed that February generally witnesses lower discretionary spending as individuals focus on tax harvesting and investment planning before the financial year ends. With most of the prominent festive spending already over, spending patterns generally remain subdued until the Holi festival.

Market consolidation results in slowing of credit card issuances

The total number of outstanding credit cards rose marginally by 0.4 per cent MoM, reaching 109 million. Still, this growth of just 9 per cent was the slowest recorded since June 2021. Thus indicating a clear drop and a slowdown in new card issuances after consistent expansion over the past few years.

Major banks led by HDFC Bank and SBI consolidated their market positions and market share. HDFC Bank and SBI both gained 10 basis points (bps) in their overall market share, thus reaching 21.6 per cent and 18.9 per cent respectively, in terms of total card numbers.

ICICI Bank stayed steady at 16.6 per cent whereas Axis Bank saw a marginal decline of 10 bps to 13.5 per cent. Further, among middle-sized banks, IDFC First Bank showed the most resilient numbers, gaining market share by 80 bps over the year to 3.2 per cent. On the other hand, Kotak Bank and RBL Bank registered minor decline in numbers.

Market outlook: Stabilisation expected

Akshay Tiwari, AVP, Equity Research Analyst at ACMIIL, said,“The subdued performance in February was largely due to tax planning activities and the absence of festive spending. Increased caution over unsecured lending has also contributed to the decline.”

“While growth has moderated, competition among major banks remains strong, with HDFC Bank and SBI gaining market share. We expect this trend to stabilise in the near term,” he noted.

As restrictions on Kotak Bank’s credit card business have been lifted by the Reserve Bank of India, the market dynamics may shift in the coming months. Hence, in spite of the February slowdown, analysts anticipate a gradual recovery in credit card spending over the next few quarters.