DNA Explainer: Credit card dues cross record high, know why it has risen and how people using such cards?

Credit card dues crossed record high in April 2023. The dues grown nearly 30 percent as fast as overall bank loans in a year. This is for the first time that credit card outstanding crossed the Rs 2-lakh-crore mark in April, TOI reported.

However, experts expressed to concern about this as they see the share of credit card dues remains small. However, RBI has cautioned over the rise in unsecured bank credit. According to RBI, credit card balances hit Rs 2,00,258 crore in April 2023 -- a 29. 7% increase over April 2022.
 
Why did credit card dues increase?

Experts say that the surge in credit debt is a reflection of their increased use for payments and inflation. The increase in credit card transactions is usually seen as a measure of consumer confidence. However, due to inflation, people pay more for the same purchases. 

Experts ruled out the rising indebtedness as a reason behind credit card dues hikes. In April 2023, the total value for which credit cards were swiped or used online was just over Rs 1.3 lakh crore. In the overall bank credit, share of card balances stand at 1. 4%. Among personal loans, housing loan (14.1%) tops the list followed by auto loans (3.7%). While card balances are the third-largest segment.

“The balance sheet growth in credit cards is trending in line with the increase in consumer credit card spends. Over the last year, consumer spending has also gone up,” TOI quoted Sanjeev Moghe, president and head (cards & payments), Axis Bank as saying.

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