Why your credit card is now less rewarding, Pg17

Key Highlights:

• IDFC First Bank recently capped the validity of reward points on some credit cards to two years.
• Airtel Axis Bank card devalued its 25% cashback offer on Airtel bills, requiring additional spending to avail the benefit.
• RBI mandated banks to set aside more capital for credit card loans in November 2023 due to concerns over unsecured personal loans.
• SBI Card issued 9.17 lakh cards in January-March, focusing on acquiring "high-value, good quality customers".
• Credit card growth rate has decreased from 21% at the end of 2023 to 8% currently.
• The share of credit card revolvers for SBI Card decreased to 22% in January-March, down from 40% in January-March 2020.

Detailed Insights:

• Banks are reducing credit card benefits like reward points and lounge access due to rising costs and regulatory changes.
• Airport lounge access has become more expensive after DreamFolks ended domestic operations in the second half of 2025.
• Increased credit card defaults and RBI's mandate for higher capital reserves have squeezed bank profits.
• Customers are now reviewing the value of their credit cards to determine if the annual fees are justified.
• The credit card market may evolve into premium cards for niche segments and standard cards for larger sections.
• Banks are shifting towards a "value over volume" strategy, focusing on high-value customers to improve profitability.
• The decline in the level of revolvers has impacted the profitability of credit card business for lenders.

Key Concepts Involved:

• Revolvers: Credit card users who carry balances and pay interest on the outstanding amount.
• Credit Card Default: Failure to repay the outstanding balance on a credit card, leading to financial losses for the issuer.
• RBI Mandate: Regulations by the Reserve Bank of India requiring banks to maintain a certain capital reserve for loans.