Reward points and freebies push credit card spends to record levels

economictimes.indiatimes.com:

Credit card usage has surged to a record, but what is driving it is not consumption, but the reward points and freebies associated with card spend that is driving it. Thanks to the mushrooming of fintechs, the gen-next is paying almost everything from house rent to groceries through their cards tied to some apps. Average monthly spending through credit cards has doubled in three years from Rs 60,000 crore a month in FY'19-20 to Rs 1.2 lakh crore a month in FY'22-23, the Reserve Bank of India data indicates.

The value of transactions touched a record Rs 1.4 lakh crore in May this year. Even as other alternate instruments such UPI, debit cards or platforms like NEFT RTGS are seeing strong transactions, the sharp surge in credit card spending is seen in the last one year. Experts say that a number of spending categories which didn’t exist earlier have seen a massive surge.

“ These include areas like travel and entertainment (domestic only), luxury spends, rentals and now you will see education as a category emerging,” said Mohit Bedi, Co-founder & Chief Business Officer, Kiwi, a platform that offers UPI-enabled virtual RuPay Credit Card in partnership with banks. Moreover partnerships like Flipkart and Amazon are accounting for 2-2.5 lacs new customers every month for the last one and a half years, he added. Besides the fact that a large number of new users in the 30-40 age group who rarely used credit cards are now using credit cards in a big way, what is attracting the consumers towards credit cards over other instruments is the number of reward points, discounts and other freebies.