Driven by the necessity of on line buying for essentials, meals delivery, and entertainment, buying cards continued to do properly in FY21, and accounted for more than a third of the applications (34.6%). In the last quarter, they became the most sought-following cards for close to 42% of credit card applicants as inflation elevated and individuals attempted to get the maximum worth for funds, according to a BankBazaar report on credit card trends in FY21.
The report indicates that individuals have been performing a balancing act – maintaining their discretionary spends low even though attempting to balance security and safety.
Surge In Credit Cards In Non-Metros
As complete cities and towns came beneath lockdown, the dependence on on line buying in the course of the last one year was felt strongly across the nation, even in the non-metros. Thanks to regulatory relaxation about KYC norms, it became less complicated for issuers to service clients in tier 2 and 3 cities. Consequently, the demand for credit cards from the non-metros continued to peak. The contribution of the non-metros elevated in the course of FY21 to 35% of the general applications, up from 24.8% in FY20.
Jump In Share Of Shopping Cards
Commenting on the similar, Adhil Shetty, CEO, BankBazaar, stated, “The credit card data indicates the maturity of the credit card users in India. Indians today believe that online and digital will continue to remain the only safe way to shop in the near future. The jump in the share of shopping cards from 30% in Q1-3 to 42% in Q4 indicates that people are looking to pay for essentials, entertainment, food delivery, and more in a way that gives them additional benefits.”
“Going forward, the emotional and economic costs of the second wave will have an impact on how people spend and provision for the future. However, one thing remains clear, Indians have adopted the credit card and every benefit it has to offer, and we will see more planned spending in the coming days,” he stated.
Surprisingly, Big Growth In Travel Credit Cards
The most significant surprise was travel credit cards, which constituted 25.6% of the applications in FY21, up from 17.13% in FY20. Travel cards became a precious currency in the last one year due to the advantages such as discount on base fare, priority verify-in, totally free airport lounge access, onboarding privileges, which eased travel woes of individuals who necessary to travel for work or individual motives in the last year. Moreover, in the last quarter specially, the expectation that the pandemic was easing resulted in individuals feeling optimistic about becoming in a position to travel following possessing been cooped up for close to a year. Consequently, this quarter alone contributed to 41% of the applications for travel cards.
Pragmatism also came into play in case of fuel cards. Buoyed by the higher fuel costs, fuel cards also made a powerful come back in the last quarter, accounting for 6.3% of applications in that quarter, taking the annual contribution of fuel cards to more than 5%.
Lower Discretionary Spends Hit Lifestyle Cards
On the flip side, larger annual charges coupled with plummeting discretionary spends and tiny to no enthusiasm for rewards such as motion pictures and fine dining, pulled down the demand for Lifestyle and Premium cards. Lifestyle card applications plummeted from more than 40% of total applications last year to a tiny more than 33% this year.
Among the age brackets, applications from the beneath-25 segment saw a massive dip. The combined influence of last year’s recession followed by the pandemic drastically impacted this new-to-workforce segment. Job losses and salary cuts at one finish and tightened credit policies at the other resulted in a drop of more than 50% in the beneath-25 segment.