India Is Shifting from Debit to Credit: 64% of Record High Credit Card Spendings Are Driven by eCommerce
Another surprising trend is the increasing use of credit cards for cash withdrawals at ATMs, contrasted with a notable decline in debit card withdrawals. This pattern has been consistent over the past few months. In July 2024, cash withdrawals at ATMs using credit cards rose an impressive 12.6% YoY in volume, reaching 0.85 million (8.54 lakh), and 21.4% YoY in value, amounting to ₹4.33 billion (₹433.31 crore).
In contrast, cash withdrawals at ATMs using debit cards fell 9.3% in volume and 7.1% YoY in value, totalling 504.01 million (50.40 crore) transactions worth ₹2.49 trillion (₹2.49 crore), respectively.
This trend, however, is quite concerning, given that credit card cash withdrawal comes with the highest interest rate. An increasing number of Indians opting to withdraw funds from credit cards is a sign of sinking deep into debt.
One must note that despite the double-digit growth in credit card ATM withdrawals, they still represent a very small fraction of total credit card transactions – less than 0.5% of both volume and value in July 2024. This minor share indicates that even though credit cards are slowly becoming more popular for cash withdrawals, they are still predominantly used for other transactions, such as those made at PoS terminals and online platforms.
On the other hand, ATM cash withdrawals constitute the largest portion of debit card transactions across all channels, accounting for 77.6% share of the total transaction volume and 84.8% share of the transaction value in July. This higher share indicates that most Indians still use their debit cards for cash withdrawals.
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