amitagl27
TF Buzz
In my view devaluation of credit cards will continue and getting a limit enhancement is going to be more difficult in coming years.
These two are product of various circulars from RBI and market related factors. Some of them I've outlined below:
Final note: Since India is facing a Credit Card Pandemic according to some experts, I urge everyone here in this forum to use your cards prudently and spend responsibly. Festival seasons is already here and no better time to be more prudent in our spending.
These two are product of various circulars from RBI and market related factors. Some of them I've outlined below:
- Due to higher risk weightage annoucned by RBI (125% from 100% for NBFC & 150% from 100% for banks), the credit limits have been either reduced or new cards are issued with lesser credit limit.
- This also impacts the offers and promotions since banks have reduced Profitability due to keeping aside higher amount they lend to customer. They can no longer encourage consumers to spend more, which increases the risk of default. Basically, banks wants prudent credit card consumers and not the ones who goes broke.
- Apart from this, credit card adoption could grow at almost thrice the speed in the next four years, credit card companies no longer find a need to attract & retain customers with glossy deals. The pie is big and every bank is going to be benefitted.
- It's kind of race to the bottom, in a world when lending is becoming difficult, banks are trying to outdo each other by offering lower credit limit and fewer benefits and still gaining customers. (look at Axis bank, even after huge devaluations since last 1 year, their credit card portfolio has increase with almost the same month on month basis)
- The primary sources of revenue for banks are interest on revolving balances and interchange fees, which automatically goes up as the adoption increases. Thus, no need to give extra perks for the credit cards.
Final note: Since India is facing a Credit Card Pandemic according to some experts, I urge everyone here in this forum to use your cards prudently and spend responsibly. Festival seasons is already here and no better time to be more prudent in our spending.
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