Credit card spend down four months in a row

• Total outstanding credit card balance down to Rs.114bn in Nov., from Rs.115bn in Oct.
• Total number of active credit cards slips to 1,887,474 by Nov., from 1,888,605 in Oct.

The decline observed in the credit card spend, as measured through the outstanding credit card balance, continued through November 2020, as spending options exhausted with the returning of restrictions on mobility and other leisure and entertainment activities. 

According to the data available through November, the total outstanding credit card balance in the licensed commercial banking sector declined to Rs.114.13 billion, from Rs.115.64 billion by end-October. 

This is the fourth month in a row such balance declined in 2020.

Credit cards had Rs.121.49 billion in outstanding balance at the beginning of 2020. 

The pandemic created an unprecedented level of personal savings, due to limited options for consumption as a result of lockdown and isolation measures. 

The year-end shopping season was lacklustre, as people were cautioned of venturing out. Merchants and traders took the collateral damage of such moves. 

Consumer durables, textiles and leisure and dining were among the top categories of credit card spend in Sri Lanka but leisure never took off since September, as authorities clamped down on out of province travel by instituting teams to carry out random testing for COVID-19 along the borders at every long weekend.  

People avoided travel for fear of getting caught and receiving a positive test result although the test results are hardly conclusive of carrying the virus. 

However, there could be some uptick in the credit card spend starting from at least January 2021, as the economy is returning to normalcy and lower interest rates on cards since September last year could woo cardholders into impulse buying. Meanwhile, the total number of active credit cards in Sri Lanka slipped to 1,887,474 by end-November, from 1,888,605 in October, albeit the card base has expanded form 1,829,927 at the beginning of the year.

Credit card spend is however is not a very good measure to gauge the consumer spend in Sri Lanka, as there are only less than two million cards in active for a population of 22 million.