Big jump in credit card outstandings

Credit card use by consumers seems to have expanded rapidly if the RBI’s figures are any indication. Credit card outstandings have shot up by a whopping 87 per cent, or Rs 12,375 crore, to Rs 26,596 crore during the year ended May 23, 2008, the RBI said on Monday. This has happened at a time when all other modes of personal loans, including housing, consumer durables and advances against FDs, moderated during the period.

“This rise is very unusual and steep. Consumers might have started using credit card more frequently. Banks, which normally charge up to 40-45 per cent per annum on credit card outstandings, are also aggressively selling cards,” said a banking source.

The growth in real estate loans was lower at 31.9 per cent (Rs 61,045 crore) as against 69.7 per cent growth during the year ended May 25, 2007. This is due to the slowdown in the realty sector with prices in many pockets showing a correction of over 20 per cent.