Since travel has resumed after the covid lockdown, people in India are spending a lot on travel. In fact, most of them continue to spend on travel and hospitality by swiping their credit cards. India’s credit card spend on travel is increasing month by month.
New data released by the Reserve Bank of India reveals that credit card spend is continuing to increase, which continues a trend beginning in May last year.
With this surge in spending, India has seen a total increase in card spending of nearly 7%, when compared to the last month, June. The July figure is quite significantly more than the previous month of June. Indians were able to spend nearly ₹1.17 lakh crore through credit cards in July, compared to ₹1.09 lakh crore in June.
“Travel has been revived, and growth in the hospitality sector as well as inflation outlook have set a positive backdrop for credit card spend and receivables,” said an ICICI Securities research report.
Airlines and international hotels have seen a lot of popularity in the Indian market recently due to factors such as the decline in cases involving cruise lines, increased demand during festive seasons, and Indians just being tired of not going out anywhere for two years.
RevPAR, revenue per available room has been increasing as of this year, meaning that hotels will see an increase in occupancy as well. There is also positive news with the Covid Cases coming to a halt along with the revival in international flights.
The rising of credit card spend by Indians
The ICICI Securities report also adds that there has been an increase in the average credit card dues when compared to December last year.
“In past six months, receivables have been on the rise month by month. The value of receivables as measured in terms of CC outstanding ‘per card in force’ (CIF) increased from ₹18,000 to ₹20,100 during the first five months of 2022 and then dropped slightly to ₹19,400 in June 22”.
When compared to debit cards, credit cards have spent at least 43% more on Indians. This is due to the interest-free period between 45-48 days that credit card companies offer.
HDFC Bank remain market leader
The country’s leading credit card company, HDFC Bank, had a significant lead in both number and volume of card transactions.
HDFC Bank customers spent approximately a third of all money in credit cards overall. Every 3 out of 4 credit cards come from top 5 issuers. HDFC and ICICI banks credit cards are the two major players – as 50% of total credit card spend made from these two issuers.
For example, HDFC Bank credit card users are not overly extravagant as IndusInd Bank was once the leader in this metric, but now it has been dethroned by a similarly unassuming name – Bank of Baroda.