Credit card spending in taka falls 6% in May

Bangladeshis reduced their credit card spending in taka by Tk160 crore or 6.34% in May compared to April due to the ongoing inflationary pressure.

According to the central bank data, consumers spent Tk2,369 crore using credit cards in May against the previous month's Tk2,529 crore.

The head of the card department of a private bank told The Business Standard that one of the reasons for the decreased spending was due to inflation. "People's income is not increasing according to their consumption expenses."

Inflation hit a decade-high of 9.94% in May this year. 

Consumers are also considering the high interest rate on credit card loans amid the inflation, the banker said. 

Consumers are wary of taking out credit card loans for small expenses to cut costs, the official said, adding, "The interest to take new credit cards is also decreasing."

According to the central bank data, the maximum amount of Tk1,377 crore was spent on purchases from various departmental stores through credit cards in May. 

About 13.70% of credit card usage was in fund transfers, 7.53% in cash withdrawals, 7.35% in utilities, 4.51% in drug and pharmacies, 3.51% in clothing, and 2.51% in transportation. 

Analysing the credit card spending pattern reveals that about 72.65% of the credit card transactions took place using VISA and about 16.40% using MasterCard.

Dollar spending on credit cards abroad 

Bangladeshi citizens spent the four-month high of Tk485 crore or $44 million in May, which is 32% more than the previous month of April, to buy various goods and services through credit cards abroad.

According to a central bank report, 43 bank credit cards were used in various purchases at departmental stores, drug and pharmacies, clothing stores, and in transportation. 

In April, this spending was Tk368 crore or $33 million.

Bangladeshis spent the highest amount of dollars through credit cards in India, followed by in the US, Thailand, and the United Arab Emirates.

A senior official at the central bank told TBS that Bangladeshi citizens can spend up to $12,000 per year. 

They can spend it through a card, and they can also take cash dollars with them when they go out of the country. They can spend it using cards or by taking cash dollars with them when they go out of the country.

"However, if anyone wants to make a dollar payment through a credit card, they can spend up to a maximum of $300 at a time."

As the price of cash dollars is high, customers are interested in dollar payment through card, said the official.

Currently, the number of credit cards issued in the country is 40.49 lakh. 

The head of the card department of a private bank said that there are many people who use multiple credit cards. As a result, the number of customers will be much less compared to the card.

According to the central bank, foreign nationals have spent as much as Tk210 crore through credit cards in Bangladesh. In dollar terms that is about $19 million. 

About 25% of the transactions took place using credit cards issued by the US.