Credit card spending in India declined 5.9% year-on-year (y-o-y) to ₹2.04 lakh crore in September 2026, marking the first annual contraction since February 2021. However, the decline does not necessarily point to a broad-based reduction in consumer spending, as last year’s high festive-season base and a shift in the timing of festive sales influenced the comparison.
According to a report by CareEdge Ratings, credit card spending had increased 13.3% month-on-month (m-o-m) in September 2025, following the implementation of GST rate cuts and the beginning of festive online sales in the last week of that month.
This year, festive sales started in October, shifting a part of the spending to the following month.
The August-September 2026 period together recorded a marginal 0.4% decline in spending compared with the corresponding period last year, suggesting that the September contraction was largely influenced by the shift in festive purchases.
However, there are other trends worth tracking. Spending growth had already slowed to 6.7% in July-August from 7.9% in the first quarter of FY27. For the first half of FY27, credit card spending grew 4.9% to ₹12.18 lakh crore, with growth slowing to 2.1% in the second quarter from 7.9% in the first quarter.
More transactions, but smaller purchases
One of the notable trends in September was the divergence between transaction volumes and the average amount spent per transaction.
According to CareEdge Ratings, credit card transactions increased 23.2% y-o-y to 61 crore in September. The number of credit cards outstanding also grew 10.5% to 12.53 crore.
However, average spending per card declined 14.8% to ₹16,305, while the average transaction value fell 23.6% to ₹3,343.
A similar trend was highlighted by Asit C Mehta Investment Interrmediates (ACMIIL). Its report put the increase in transaction volumes at 22.8% y-o-y to 60.6 crore, while the average transaction value declined 23.4% to ₹3,363.
The combination of higher transaction volumes and lower average transaction values indicates that cards are being used more frequently, but for smaller payments.
CareEdge Ratings attributed this trend partly to the growing use of UPI-linked credit card payments, which typically involve smaller transaction amounts. The shift of high-value festive purchases from September last year to October this year also contributed to the decline in average transaction size.
For instance, SBI Card reported UPI-linked spends of ₹21,300 crore in the second quarter of FY27, accounting for around a fifth of its total spending.
Online spending declines, point-of-sale transactions grow
The spending pattern also points to a change in the distribution of credit card transactions between online and offline channels.
Online credit card spending declined 12.5% y-o-y to ₹1.26 lakh crore in September, while point-of-sale (PoS) spending at physical merchant outlets increased 7.2% to ₹77,751 crore, according to CareEdge Ratings.
Consequently, online transactions accounted for 61.7% of total credit card spending, down 469 basis points from September 2025.
The ratings agency attributed the decline in online spending partly to the high base created by festive online sales in September last year. It also noted that weaker air travel, where bookings are largely made online, weighed on online spending.
ACMIIL’s analysis also showed that online spending increased 2.5% sequentially in September, while PoS spending declined 2% from August.
This suggests that while online transactions continue to account for a larger share of credit card spending, offline spending has recorded stronger annual growth in recent months.
HDFC Bank gains spending share; ICICI Bank loses ground
The September data also highlights changes in the market share of major credit card issuers.
Private sector banks accounted for 73.78% of total credit card spending, up 44 basis points from August, while public sector banks’ share declined 34 basis points to 20.41%, according to CareEdge Ratings.
Among the large issuers, HDFC Bank was the only one of the four largest credit card issuers to report annual growth in spending.
Its credit card spending increased 7.7% y-o-y, while its share of industry spending rose 165 basis points sequentially to around 32%, according to ACMIIL.
In contrast, ICICI Bank’s spending declined 26.3% y-o-y, while SBI and Axis Bank recorded declines of 14.1% and 11.1%, respectively, as per ACMIIL’s estimates.
CareEdge Ratings also noted that spending at public sector banks other than SBI increased 26.3% y-o-y. Their share of industry spending rose to 3.30% in September from 2.46% a year earlier.
What to expect from credit card spending?
The September numbers need to be viewed in the context of the festive calendar, but the slowdown in spending growth before September also warrants attention.
CareEdge Ratings expects credit card spending to increase to ₹2.28-2.38 lakh crore in October as festive sales gather momentum. It expects spending to remain strong in November, supported by Diwali-related purchases.
However, the agency flagged higher prices and the recent rate hike as factors that could weigh on festive spending.
Saurabh Bhalerao, Director, CareEdge Ratings, said banks continue to add cards and customers are using them more frequently, although for smaller payments. He added that an important indicator to watch would be how effectively banks convert the customers added over the past year into active card users.