Credit card spending hits record high as economy reopens

Spending through credit cards hit a record high in March this year due mainly to the reopening of the country’s economy after the two-year Covid-19 shock.

The tourism and hospitality sector that bounced back after the pandemic boosted credit card use, according to industry insiders.

Credit card transactions collectively stood at Tk 2,513 crore in March of this year, up 19.15 per cent from a month earlier and 40.94 percent year-on-year, the Bangladesh Bank’s latest data showed.

“The use of credit cards is growing rapidly to keep pace with the acceleration of digital payment,” said Ahsan Ullah Chowdhury, head of digital financial services at Eastern Bank Ltd.

He said that credit card use in the international segment had fallen drastically during the pandemic when many countries imposed travel bans. 

“The plastic card use is increasingly growing after the withdrawal of the travel ban,” he added.

Eastern Bank has now around two lakh credit card users while the outstanding loans in those cards stood at Tk 700 crore.

The bank is offering four products – Visa, Mastercard, UnionPay, and Diners Club, according to Chowdhury.

In March of this year, the number of credit cards stood at 37,98,207 in the country, up from 32,49,764 a month ago, according to the BB data.

Echoing Chowdhury, MasterCard Country Manager Syed Mohammad Kamal told The Business Post, “The card transaction increases as the people’s businesses gain pace after the Covid-19 pandemic.”

He said that the Eid-ul-Fitr, the biggest festival for Muslims, was another reason behind the rising trend of card transactions in March.

People are traveling now locally and abroad in the post-pandemic period, which was halted due to the pandemic period, said Kamal.

He said that card transactions in April also increased due to the festival.

The MasterCard country head urged the government to provide incentives for encouraging people to opt for cashless transactions.

“This might have a reflection in the upcoming budget,” he said.

A Southeast Bank Card Division executive said that clients made a majority of their payments for travel, tourism, and lifestyle products through credit cards but these activities had a blow during the pandemic.

The central bank asked the banks to impose more than 5 per cent on top of the highest interest rate on consumer loans.

But banks were charging between 25 and 27 per cent interest on credit card loans when the interest rate on other loan products was capped at 9 percent.

In September 2020, the Bangladesh Bank capped the interest rate on credit card loans at 20 percent.

Thirty-five out of 60 banks are now operating credit card business in the country.