Credit card spending hits 7-month low in Feb; know why

Credit card spending in India experienced a marked slowdown in February 2025, reaching the lowest point in seven months. According to data from Asit C Mehta Research, credit card transaction volumes registered their slowest growth in 13 months, indicating a shift towards more cautious consumer behaviour. The total card spends fell by 9% month-on-month (MoM) to Rs 1,672 billion. Despite this decline, there was a 12% year-on-year (YoY) increase, although this was at a slower pace compared to previous months. 

February saw transaction volumes drop to 396 million, representing an 8% decline from the previous month. This downturn notes a moderation in consumer expenditure, with many opting to hold off on discretionary spending. While transaction volumes still showed a 27% YoY increase compared to February 2024, the growth rate was noticeably slower than the 30% observed in preceding months, highlighting a shift in spending patterns. 

A contributing factor to this moderation is the traditional February slowdown, driven by tax planning and the absence of major festivities. As the financial year end approaches, consumers focus on financial management and tax planning, leaving less room for discretionary purchases. The lack of major celebrations such as Diwali or New Year further contributes to subdued spending as consumers await the next festive period. 

The average spend per transaction also declined slightly from Rs 4,282 in January to Rs 4,219 in February, reflecting a trend towards prioritising essential purchases. Akshay Tiwari, AVP - Equity Research Analyst at Asit C Mehta Investment Intermediates, noted that February's subdued performance is attributed to tax-related activities and caution around unsecured lending, contributing to the decline in consumer expenditure to a seven-month low. 

"The subdued performance observed in February can primarily be attributed to tax-related planning activities and the lack of festive occasions during the period. This, coupled with increased caution within the industry regarding unsecured lending, led to consumer expenditure declining to a seven-month low," Tiwari said.

Beyond spending patterns, credit card issuance also saw a slowdown. The total number of outstanding credit cards increased by just 0.4% MoM, reaching 109 million. This is a stark contrast to the aggressive growth in previous years, with the 9% YoY growth in card issuance marking the slowest rate since June 2021. This suggests a broader cooling off in the market, as the period of rapid card issuance appears to be ending, reflecting the changing dynamics in consumer credit behaviour.