India’s credit card spend slumps to 7-month low as tax season squeezes

By Puja Sharma

Credit Card Spending Sees a Seasonal Slowdown in February 2025, Hits Seven-Month Low – 

Credit card spending in India declined in February 2025, in line with historical trends. The latest industry data reveals a 9% month-on-month (MoM) drop in total card spending to Rs 1,672 billion ($19.52 billion), marking the lowest spending levels in seven months. However, on a year-on-year (YoY) basis, spending showed a 12% increase, albeit at a slower pace compared to previous months.

Total transaction volumes also followed a similar trend, declining 8% MoM to 396 million, reflecting a moderation in consumer expenditure. This marks the slowest YoY growth in 13 months, with volumes increasing by 27% compared to February 2024. The average spending per transaction softened from Rs 4,282 in January to Rs 4,219 in February, indicating a cautious approach by consumers.

February has traditionally seen a slowdown in discretionary spending as consumers prioritise tax planning. Additionally, with major festive spending already concluded, expenditure patterns remain subdued until the Holi festival period. The total number of outstanding credit cards saw marginal growth of 0.4% MoM, reaching 109 million. However, YoY growth of 9% was the slowest since June 2021, reflecting a cooling in new card issuances after years of aggressive expansion.

Leading banks strengthened their hold on the credit card market. HDFC Bank and SBI gained 10 bps in market share, reaching 21.6% and 18.9%, respectively, while ICICI Bank held steady at 16.6%. Axis Bank slipped slightly to 13.5%. Among mid-sized players, IDFC First Bank led growth, adding 80 bps over the past year to reach 3.2%, while RBL Bank and Kotak Mahindra Bank saw small declines.

With the RBI’s recent lifting of restrictions on Kotak Mahindra Bank’s credit card business, the industry anticipates potential shifts in market share. While spending is expected to recover in the coming months, February’s slowdown highlights the continued impact of seasonal trends and industry-wide moderation in growth.

This shift reflects changing consumer preferences, cautious lending by banks, and regulatory adjustments. With the RBI lifting restrictions on Kotak’s credit card business, competition may intensify in the coming months.

Akshay Tiwari, AVP – Equity Research Analyst – BFSI, Asit C Mehta Investment Intermediates Ltd, said, “The subdued performance observed in February can primarily be attributed to tax-related planning activities and the lack of festive occasions during the period. This, coupled with increased caution within the industry regarding unsecured lending, led to consumer expenditure declining to a seven-month low. While the overall growth rate has slowed, competitive dynamics among major players have intensified, with HDFC Bank and SBI each achieving a 10 bps increase in market share. Meanwhile, card issuance rates have plateaued, recording a marginal growth of 0.4% MoM, which translates to approximately 440,000 new cards issued during the month. We expect this tepid trajectory to continue in the near term before stabilising.”