Credit card benefits diminish amid sustainability concerns and falling revolver rates

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Credit card benefits diminish amid sustainability concerns and falling revolver rates
Credit: © Reuters.

Indian credit card companies are reassessing their rewards programs and reducing benefits such as cashback and travel miles, reflecting a broader devaluation trend in the industry. This comes as businesses grapple with challenges like improving margins and countering inflation while navigating the rapid growth of digital payments in the country.

Today, HDFC Bank announced it would now require a minimum quarterly spend for Regalia Cards' lounge benefits. Meanwhile, Axis Bank has increased the annual fee and removed the monthly milestone benefit from its Magnus Credit Card. These changes underscore the ongoing reassessment of rewards programs for sustainability, according to

A contributing factor to these changes is the decline in the revolver rate, which refers to credit card users who carry over their balance from month to month. The drop in this rate indicates more people are using personal loans to clear credit card balances, which reduces profitability and leads to further devaluation. As an example, SBI Credit Card's revolver rate has dropped from 34% in Q2FY21 to 24% in Q2FY24.

Sanjeev Moghe, Axis Bank's President & Head of Cards & Payments, explained that banks regularly review features to align with customer demand. He cited high costs and declining revolver rates as reasons for changes like the rationalization of lounge access.

Paisabazaar advised cardholders to stay informed about devaluations and discuss alternatives with their providers. Additionally, they warned against canceling cards due to potential impacts on credit scores.

With an average digital payment per credit card around ₹5,200 in India, the credit card industry is facing a crucial period of adjustment as it seeks to balance customer benefits with sustainable business practices.

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