Credit card additions and expenditures climbed at the fastest pace in May

Credit card additions and expenditures climbed at the fastest pace in May in recent quarters, underscoring the fading impact of Covid-induced disruptions on consumption habits, as an increasing number of urban Indians took lengthy vacations and bought high-ticket discretionary items after being virtually padlocked for two consecutive summers.

The banking industry added 1.7 million cards in May, the highest in 27 months.

Outstanding loans on credit cards were the highest ever, breaching the ₹1.54-lakh-crore mark.

"Latest data reveal that credit card spends have been very strong, touching an all-time high level (up 8% MoM) in May 2022," said Suresh Ganapathy, associate director, Macquarie Capital.

"Bounce rates by value are also at three-year low levels. These data points are indicating that the retail economy is strong."

To be sure, a reversal in the rate trends could impact spending on borrowed funds.

India's central bank has raised rates twice in a month beginning early May to restrain inflation.