15 December 2020 09:30 am
The total outstanding credit card balance fell yet again for the third month in a row in October amid lack of spending opportunities with coronavirus restrictions.
However, people are continuing to sign up for new cards as the total card penetration is increasing unabated.
According to the latest data available up to October, cardholders in total had Rs.115, 639 million in outstanding balance, compared to Rs.117, 534 million in September.
By the end of 2019, the total outstanding balance was Rs.121, 489 million.
In August, the Monetary Board slashed credit card interest rate from 28 percent to 18 percent to give the benefit of falling rates to cardholders. However, that is yet to make an impact.
May be the availability of personal and other short term loans, mostly at single-digit rates, helping people to go light on swiping their credit cards.
Lack of spending opportunities, mainly foreign travel, could be another key reason for lower card usage.
By end-October there were 1,888, 605 active credit cards compared to 1,884,341 active cards in September.
The banks are carrying out aggressive campaigns to sell credit cards, as they remain one of the most lucrative businesses for banks to make money via interest income and other fees.