https://www.financialexpress.com/business/banking-finance/credit-cards-lose-sheen-cibil/4286651
Credit cards are losing ground to personal loans and other consumption-credit products as banks are no longer playing on the volumes and are preferring customers with higher balances, according to a new research report by TransUnion CIBIL, Beyond the Swipe.
The share of credit cards in the unsecured loan market has fallen to 38% in 2026 from 56% in 2016. The space is now taken over by small-ticket personal loans of Rs 50,000 or less.
“Issuers (banks) are no longer competing for just new consumers; they are competing for higher balances and priority within the wallet of the same consumer,” the report said.
On the digital payment and accessibility side, credit cards are facing competition from Unified Payments Interface (UPI).
Credit cards are no more the dominant unsecured product in wallet as they face increasing competition within the same consumption-driven small credit space rather than operate as a default option.
According to the report, card balance share in consumer wallet for consumption credit decreased to 26% in March 2026 from 36% in March 2016.
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Card balances as a share of consumption-credit balances in the industry remained stable at 15% compared to 16% a decade ago.
The share of consumers holding other consumption-led credit in their wallet has doubled from 16% to 32%, the report said.
While the number of credit card consumers has jumped from 1.4 crore to 5.2 crore, outstanding balances expanded from 0.4 lakh crore to Rs 3.1 lakh crore.
Credit card penetration low
Credit card is an under-penetrated market in India compared to even developing countries, despite improvement in delinquency levels.
India has 5.2 crore credit card users, which is just 25% of the overall credit active population of about 25 crore people, Bhavesh Jain, Managing Director and CEO of CIBIL told reporters on Wednesday.
This compares with 62% in Columbia, 98% in Hong Kong, 81% in the USA, 97% in Canada and 70% in the UK. In South Africa, it is lower at 22%.
Multiple credit card users up
The number of people holding three or more credit cards in their wallet has grown to 22% from 12% a decade ago, the report said.
The average balance per user has increased to Rs 65,000 from Rs 31,000.
Gen Z Customers
An increasing number of young consumers are already having a credit history before turning to credit cards, with those aged between 24-30 having at least two active credit products.
Nearly 50% of net-to-credit card (NTCC) consumers are aged 30 years or below compared to 43% four years ago.
According to the report, 69% of GenZ NTCC consumers opened another unsecured credit product within 12 months compared to 55% in 2018.
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This article was first uploaded on July eight, twenty twenty-six, at twenty-four minutes past six in the evening.
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