The Indian credit card market has changed rapidly over the last few years. With millions of new users and enhanced digital payments, card usage is at an all-time high. Yet there are signs that while more people are swiping and tapping existing cards, the pace of new credit card issuance may be cooling off. What does this mean for consumers, banks, and the wider credit landscape? Let’s unpack the latest trends, explore possible reasons, and discuss what to expect in the coming year.
Recent Growth Trends: Card Issuance vs. Card Payments
India has witnessed a steady expansion in credit card adoption since 2020. According to the RBI, the total number of credit cards in force crossed 100 million by late 2023 — a significant leap from previous years. At the same time, monthly purchases on cards have seen double-digit growth year-on-year. But there is growing industry chatter that the breakneck speed of new card launches and customer onboarding may be slowing, especially after the surge post-COVID.
- The number of active card users continues to rise, driven by increased penetration in Tier 2 and Tier 3 cities.
- Digital payments, including UPI and credit card transactions, now overshadow cash in urban retail transactions.
- Banks are becoming more selective about approving applications — prudent risk management is back in focus.
Why Might Credit Card Issuance Slow Down?
Issuing new cards requires banks and issuers to take calculated credit risks. Several signs point to a maturing market where responsible lending and risk assessment play a bigger role than sheer card count.
Possible Causes
- RBI Regulations and Oversight: Tighter regulations (such as revised KYC norms and fair lending practices) have introduced extra caution.
- Rising Delinquencies: Growth in unsecured lending often leads to increased defaults, causing issuers to tighten approval criteria.
- Credit Saturation: Urban markets and prime customers already own multiple cards; further room for expansion is limited there.
- UPI Disruption: With the rise of UPI-linked credit cards and easy QR code payments, not everyone feels the need for a traditional card.
- Profitability Focus: Issuers now prefer quality (spending, repayment) over quantity (total cards issued) to ensure portfolios remain healthy.
But Credit Card Payments Remain Strong
Even if the number of new cards flattens, total transaction value remains robust. Consumers are more comfortable than ever making high-value purchases, traveling, shopping online, and paying bills through credit cards. Here’s why this trend continues:
- Higher Average Ticket Sizes: Cardholders are spending bigger amounts on each transaction.
- Reward Maximization: Premium cards with travel and cashback rewards, like the HDFC Regalia Gold Credit Card, encourage everyday card use.
- Online Shopping Growth: E-commerce boom and digital subscriptions strongly favor card payments.
- Loyalty Programs and EMI Offers: Attractive reward structures and EMIs on big-ticket items incentivize even higher usage.
What Does This Mean for Consumers?
If card approvals slow, it may become a bit tougher for new-to-credit applicants or those with low credit scores to get instant credit card approval. However, for existing cardholders, this shift can actually be positive:
- Banks are likely to offer more benefits and retention offers to their active cardholders.
- Premium and co-branded cards will get refreshed features — exciting for users who maximize credit card offers.
- Responsible spending and timely repayment could lead to higher limits and exclusive invites.
New applicants should focus on the basics — clean credit history, stable income, and comparing features to find the best credit card for their needs.
Opportunities and Adaptations: What Banks and Issuers Are Doing
With the growth phase shifting, banks are innovating in several ways:
- Partnerships: Tighter alliances with fintechs and payment apps to offer next-gen products like UPI RuPay credit cards.
- Customized Credit: Cards for specific lifestyles — premium travel, diners, cashback, and even fuel-only cards.
- Simple, Transparent Fees: More “zero annual fee” cards such as HSBC Platinum Credit Card to attract first-timers.
- Credit Card Benefits Enhanced: From lounge access, movie tickets, to reward accelerators.
A Glimpse Ahead: The Road for 2025
The total value of card payments is expected to keep growing, even if new account opening rates dip slightly. What’s coming next?
- More focus on reward programs and customer experience, rather than just expanding numbers.
- Use of alternative data (like digital footprints) to assess creditworthiness, supporting responsible expansion.
- Continued overlap between UPI, credit cards and BNPL (Buy Now Pay Later) solutions.
- Rise of no-annual-fee, entry-level cards with easy online application, like the IDFC FIRST Millennia Credit Card.
How to Choose in a Changing Credit Card Market
The maturing market brings new advantages for those who compare credit cards carefully:
- Look beyond welcome bonuses — focus on long-term reward rates and regular spends.
- Prefer cards with zero or low annual fees if you’re just starting.
- Check for travel rewards, lounge access, or high cashback if you spend in those categories.
- Always keep an eye on interest rates, fees on cash withdrawals, and late payment penalties.
- Read expert reviews and use tools like FinWitty’s Find My Card to compare offers.
FAQs on Credit Card Market Trends
1. Will banks stop issuing new credit cards?
No, but banks may tighten approval criteria. They will continue to seek quality customers, and issuance may be more selective than before.
2. How can I improve my chances of getting instant approval?
Maintain a healthy credit score, stable income, and a clear repayment track record. Some zero annual fee cards are easier to get than premium options.
3. Which credit card categories will grow in popularity?
UPI-linked credit cards, fuel cashback cards, and entry-level cards are witnessing high demand. Co-branded travel and shopping cards continue to attract frequent spenders.
4. Is it better to have multiple credit cards or just one?
It depends on your spending pattern and repayment discipline. Multiple cards help maximize rewards, but only if used responsibly.
5. Will card-based payments remain relevant with UPI?
Yes. While UPI dominates day-to-day transactions, credit cards are preferred for high-value spends, EMI offers, rewards, and better purchase protection.
Conclusion: Making the Most of a Balanced Market
The Indian credit card market isn’t shrinking — it’s adjusting to ensure long-term stability for both banks and consumers. Fewer new cards, but more thoughtful features and payment options, means savvy consumers benefit most. If you want to keep updated, compare top offers, or find a card tailored for you, start with FinWitty’s Find My Card tool or check out the latest card benefits on our blog. Smart usage is your superpower in this evolving landscape!