Bangladeshi consumers utilised credit cards for foreign currency transactions surpassing Tk 769 crore in July 2023, marking the highest amount spent in the past five years.
This increase can be attributed to several factors, such as the convenience of obtaining loans via credit cards, a rising USD exchange rate in the banks and kerb markets, and a USD crisis within banks. These circumstances have prompted individuals to opt for card transactions instead of carrying physical cash.
Bangladesh Bank's data indicates that foreign currency transactions in July soared by a significant 41 per cent when compared to the previous month of June, where cardholders spent Tk 543 crore.
The Bangladesh Bank has been providing data on credit card spending since December 2018 on its website.
Syed Mahbubur Rahman, CEO and managing director of Mutual Trust Bank Ltd, told The Business Post, "The increasing price of the US dollar and the market crisis are the primary factors behind the surge in foreign currency transactions through credit cards. Banks offer an exchange rate of $1 for Tk 110 to credit card customers, but the USD rate has escalated to Tk 117 in the kerb market, compounded by the local USD market crisis." He expressed optimism that the USD crisis would not persist in the future.
From January to July 2023, foreign currency transactions through credit cards witnessed an impressive 96 per cent surge, amounting to Tk 4,295 crore. This is in stark contrast to the same period last year when cardholders spent Tk 2,192 crore. The breakdown of credit card spending in the first seven months is as follows: Tk 856 crore in 2021, Tk 2,192 crore in 2022, and Tk 4,295 crore in 2023.
An analysis of credit card spending patterns reveals that approximately 77 per cent of these transactions were conducted using VISA cards, 13 per cent with MasterCard, and 9 per cent with American Express cards.
A senior official at the central bank provided insights, explaining, "Bangladeshi nationals are permitted to spend up to $12,000 annually, which they can do via cards or by carrying physical US dollars when travelling abroad. However, if anyone wishes to make a dollar payment using a credit card, they can spend a maximum of $300 at a time."
Central bank data further reveals that Bangladeshi travellers spent the highest amount of foreign currency in India in March 2023, with expenditures totalling Tk 73 crore. In February, they spent Tk 103 crore in India.
The list of countries with the highest foreign currency expenditures by Bangladeshi travellers includes the USA, Thailand, UAE, Singapore, the UK, KSA, Malaysia, Canada, England, Ireland, and Australia.
