Credit card usage falls as USD soars

The surging US dollar against the taka has put a damper on credit card spending as some cardholders cut the transactions, bankers say.

Credit card transactions stood at Tk 2302.4 crore in August, sharply down 10.69 per cent from Tk 2,578 crore in July, according to the latest data from the Bangladesh Bank.

“The credit card spending fell due to the high exchange rate of the US dollar against the taka,” said Ahsan Ullah Chowdhury, the head of digital financial services of Eastern Bank Limited.

He said that credit card usage abroad took a hit as the US dollar rate for credit card payments and its selling rate are the same.

EBL has almost five lakh plastic cards, including around two lakh credit cards during the period. The bank is offering four products – Visa, Mastercard, UnionPay, and Diners Club.

Mutual Trust Bank (MTB) has 86,000 credit cards and 3 lakh debit cards. The total outstanding loans against the credit card of the bank stood at Tk 380 crore. “The transaction limit of most of the cardholders is now close to end due to the higher US dollar rate,” said MTB Managing Director and CEO Syed Mahbubur Rahman.

Bangladeshi nationals are allowed to spend a maximum of $12,000 per year outside of the country through credit cards or cash, according to the central bank’s regulations.

On the other hand, most card users lowered their spending due to the ongoing adverse economic situation, said Rahman.

A top executive of The City Bank seeking anonymity told The Business Post that credit card transactions in the international segment witnessed a downtrend due to the rising cost of the US dollar against the taka.

Previously, the US dollar rate for credit card payment settlement ranged from Tk 94 to Tk 95 per dollar but now the rate is between Tk 106 and Tk 112, according to Bangladesh Foreign Exchange Dealers Association (BAFEDA).

Recently, BAFEDA wrote to authorized dealers saying that the US dollar rate for credit card payment settlement is the same as the cash dollar selling rate.

Banks are now selling dollars in cash to travelers at the rate of Tk 106 to Tk 112 per dollar.

Apart from the credit card, debit card transactions also declined in August, the central bank data showed.

Debit card transactions were Tk 33,786 crore in the month, down from Tk 35,407 crore in July.

Now total credit cards in the country stood at more than 20.22 lakh, debit cards 2.83 crore, and prepaid cards 29.85 lakh, as per the BB data.

Industry insiders had feared that credit card issuance rate might fall as the government has made it compulsory to submit a copy of an individual’s income tax return to enjoy 38 types of services, including applying for a credit card.

However, last month, the government tax authority relaxed rules regarding the requirement of tax return submission for micro and small businesses and students, who use credit cards.