Credit card spend finally turns the corner after four months

Total outstanding credit card balance, a measure of card spend, finally turned the corner in December 2020 after four months of continuous decline since August. 

The data showed outstanding card balance growing by Rs.3.1 billion during December 2020, indicating that people spent on shopping, travel and other recreational activities as the year-end festive season approached, though significantly down compared to 2019 due to pandemic fears.

The total outstanding card balance as at end-December 2020 was Rs.117.3 billion, up from Rs.114.1 billion in November. However, even with the December increase, the outstanding balance of credit cards still ended up lower than the Rs.121.5 billion that was at the end of 2019. 

In line with the decline in general interest rates, the Central Bank asked banks to slash interest rates on credit cards to 18 percent. 

Sri Lanka’s credit card spend does not fully reflect the country’s consumption levels as much of the transactions still take place via cash, although a significant amount of that shifted online due to the pandemic. 

Sri Lanka had 1,879,255 active cards by the end of December 2020, up from 1,887, 474 cards in November and 1,829, 927 cards at the end of 2019.