The demand for travel credit cards jumped in FY21, especially in the fourth quarter, even as people remained cooped up at home amid lockdown. Travel credit cards constituted 25.6 per cent of the total applications in FY21, up from 17.13 per cent in FY20, data from financial product marketplace BankBazaar.com showed. Moreover, of total travel credit card applications in FY21, 41 per cent were applied in the fourth quarter alone.
"Travel cards became a valuable currency in the last one year due to the benefits such as discount on base fare, priority check-in, free airport lounge access, on-boarding privileges, which eased travel woes of people who needed to travel for work or personal reasons in the last year," says Adhil Shetty, CEO, BankBazaar.
"Moreover, in the last quarter especially, the expectation that the pandemic was easing resulted in people feeling optimistic about being able to travel after having been cooped up for close to a year. Consequently, this quarter alone contributed to 41 per cent of the applications for travel cards," he adds.
The demand for shopping cards also picked up. The quarterly data, compiled by BankBazaar shows, shopping credit cards accounted for 41.61 per cent of total applications in Q4FY21 compared to 34.11 per cent in Q3FY21. For the full year, the shopping credit cards accounted for 35 per cent of total applications in FY21 as metro and non-metro consumers increasingly took to online shopping. It was at 33.52 per cent in FY20.
"The jump in the share of shopping cards 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," says Shetty.
On the flip side, lifestyle card applications plummeted from over 40 per cent of total applications last year to a little over 33 per cent this year. "Higher annual costs coupled with plummeting discretionary spends and little to no enthusiasm for rewards such as movies and fine dining, pulled down the demand for Lifestyle and Premium cards," says Shetty.
Another key takeaway from the report highlights a surge in credit cards in non-metros and a dip in metros. The contribution of the non-metros increased during FY21 to 35 per cent of the overall applications, up from 24.8 per cent in FY20. It decreased in metros to 64.64 per cent in FY21 from 75 per cent in FY21.
Among the age brackets, applications from the under-25 segment saw a big dip to 5.83 per cent in FY21 from 9.21 per cent in FY20. "The combined impact of last year's recession followed by the pandemic drastically affected this new-to-workforce segment. Job losses and salary cuts at one end and tightened credit policies at the other resulted in a drop of more than 50% in the under-25 segment," says Shetty.
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