Consumer spending in India surged sharply after the rollout of GST 2.0 and the onset of the festive season. In the first three days following the GST rate cut announced in September 2025, the daily average spending through credit cards rose nearly five times to about Rs 20,000–25,000 crore, compared to the usual Rs 5,000–6,000 crore. The monthly data further reflects how strong this trend has become.
Let us break down the numbers to understand what this surge means for investors and credit card companies.
What’s Happening?
Credit card spending touched a record high in September as festive shopping and GST rate cuts boosted consumer demand. Monthly spending crossed Rs 2.16 lakh crore, up 22% year-on-year from Rs 1.77 lakh crore in the same month last year.
E-commerce platforms recorded the biggest jump, with spending of over Rs 1.44 lakh crore, while in-store transactions through PoS machines exceeded Rs 72,000 crore. The government’s decision to cut GST rates from September 22 made several products cheaper, encouraging higher spending across categories.
Adding to this momentum, nearly 11 lakh new credit cards were issued in September, compared to 6.9 lakh cards last year, taking the total number in circulation to 11.3 crore.
Customer Switching from Debit to Credit Cards in India
India’s debit card transactions fell notably in September 2025, both in volume and value. As per iLattice data, transaction volumes declined 14% YoY, while the total value fell by around 6%, showing that consumers are increasingly shifting towards credit cards and other digital payment options.
A total of 0.54 billion debit card transactions were recorded during the month. Of these, nearly 81% were ATM withdrawals, 14.4% were PoS transactions, and only 5% were on e-commerce platforms. In value terms, debit card transactions stood at Rs 2.66 billion, with ATM withdrawals accounting for 86% of the total.
While debit card usage weakened, credit card spending surged during the same period, highlighting a shift towards credit for big-ticket and discretionary purchases.
Credit Card Swipe Surge: A Growing Challenge in India
Earlier this year, data published by The Financial Express highlighted rising concerns over growing credit card debt in the country. As of March 2025, overdue payments between 91 and 360 days had jumped 44% YoY, according to CRIF High Mark. Nearly Rs 34,000 crore worth of credit card bills had remained unpaid for more than three months, categorised as non-performing assets, similar to bad loans in the banking system.
A majority of this stress lies in the 91 to 180-day overdue bracket, where unpaid dues climbed to Rs 29,983 crore from Rs 20,873 crore a year earlier.
The report also showed a steady rise in the Portfolio at Risk (PAR), which measures the share of overdue credit card debt. For cards overdue by 91–180 days, PAR increased to 8.2% in March 2025 from 6.9% a year ago. For 181–360 days, it rose to 1.1% from 0.9% in 2024.
What Does It Mean for Investors?
The surge in credit card spending and new issuances indicates a strong recovery in consumer confidence and retail demand, a positive sign for both banks and card issuers. Higher spending translates into increased transaction fees, interest income, and improved profitability for card companies, which could support their earnings and potentially lift their stock performance.
These top four issuers such as HDFC Bank, ICICI Bank, SBI Cards, and Axis Bank together accounted for 7.31 lakh new credit cards issued in September, underscoring their leading position in the market. For investors, this strong momentum suggests sustained earnings growth for card issuers and potential short-term gains in their share prices.
What’s Next?
India’s credit card industry is poised for a major expansion. According to a PwC report, the number of credit cards in circulation is expected to reach 200 million by FY29, growing at an annual rate of 15%. The industry has already doubled its card count over the past five years, and this growth trajectory is likely to continue.
Alongside the increasing number of cards, transaction activity is also rising steadily. Over the past year, transaction volumes have grown 22%, while the total value has jumped 28%. With more Indians choosing credit over cash, the coming years could bring a strong growth phase for both banks and credit card companies, strengthening the digital payments ecosystem and supporting long-term expansion of the sector.
*The companies mentioned in the article are for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
