July 2026: India's credit card spending growth moderated in July even as transaction volumes continued to rise at a much faster pace. The diverging trend suggests that consumers are making more card transactions, but the average value of individual transactions is becoming smaller.
The new data has painted a mixed picture for credit card issuers. SBI Cards & Payment Services continued to have huge spending growth, but its share of overall industry spending declined sequentially. The contrasting trends have prompted brokerages to look at the health and sustainability of credit card spending growth.
Morgan Stanley highlighted the growing gap between spending and transaction growth, while Jefferies pointed to SBI Cards' 22% year-on-year spending growth in July and a 140-basis-point month-on-month decline in its industry spending share.
July Credit Card Spending Growth Slows
According to Morgan Stanley analysts Subramanian Iyer, Kushan Parikh, Sakshi V Chaplot and Lavish Porwal, industry credit card spending has been on a broad decelerating trend.
Spending growth declined from 22.5% YoY in March 2025 to 8.9% in March 2026 and 7.4% in July 2026.
Jefferies analysts Bhaskar Basu, Kamal Mulchandani and Prakhar Sharma estimated that industry spending growth for July was 7.1% YoY, while 9.7% in June was in line with 9.7% in June.
The two brokerages reported slightly different July growth figures, which may reflect differences in their underlying datasets or calculation methodologies. But both agree on the general theme: credit card spending growth moderated in July.
At the same time, the number of cards in circulation continues to grow. The industry cards-in-force increased around 10% YoY in July, faster than spending growth of around 7%.
As a result, spending per card declined by about 2.4% YoY, extending a trend that has been ongoing for around 10 months.
Transactions Rise Faster than Spending
One of the most important signals in the July data is the gap between transaction growth and spending growth.
Morgan Stanley said credit card transaction volumes increased approximately 24 percent YoY in July, substantially faster than overall spending.
To be sure, consumers are using credit cards more frequently but for smaller-ticket purchases.
The trend has major implications for card issuers. Higher transaction frequency can help increase fee income and card engagement, but if average transaction values remain under pressure, the overall spending growth might continue to lag the expansion in card numbers.
Morgan Stanley also noted that card usage on a current cards-in-force basis has averaged only around 0.1% YoY growth over the past 10 months.
Newly issued cards may take time to become meaningful contributors to spending. Newly issued cards typically take one to two years to fully ramp up spending, according to the brokerage.
SBI Cards Spending Rises 22% YoY
SBI Cards is still able to maintain its relatively strong spending growth despite the general industry slowdown.
Jefferies said SBI Cards' spending increased 22% YoY in July, but this was lower than the 34% growth recorded in June.
The more cautious signal came from its market share. SBI Cards' share of overall industry credit card spending declined 140 basis points month-on-month to 19% in July from 20% in June.
The sequential decline could have been partly the result of a moderation in corporate spending.
SBI Cards’ share of point-of-sale spending, however, remained relatively stable at 18%.
Its share of online spending fell to 20% from 22% in June, even as the industry's online spending mix increased by 100 basis points to 64%.
Based on the mixed signals from SBI Cards' latest performance, Jefferies has retained its “Hold” rating on SBI Cards' performance, a view of SBI Cards based on these signals in the company’s performance.
SBI Cards' Monthly and Yearly Market Share Tell Different Stories
The sequential decline in SBI Cards' market share should not be interpreted in isolation.
Morgan Stanley said SBI Cards gained about 2.2 percentage points of monthly spending market share on a year-on-year basis. The brokerage attributed part of the improvement to a relatively low corporate spending base.
HDFC Bank also gained around 1.2 percentage points of spending market share on a YoY basis.
By contrast, ICICI Bank and IndusInd Bank each lost about 2.3 percentage points of monthly spending market share on a YoY basis.
So SBI Cards losing 140 basis points of share month-on-month while gaining 2.2 percentage points year-on-year are not contradictory figures. They compare performance across different time periods.
The larger takeaway is that SBI Cards continues to see strong annual spending growth, but its most recent sequential market share performance has weakened.
HDFC Bank Leads Card Additions
The expansion in India's credit card base is relatively healthy.
According to Morgan Stanley's YTD FY27 data, SBI Cards and HDFC Bank each accounted for 16% of industry net card additions. ICICI Bank followed with 15%, Federal Bank with 10%, and IDFC First Bank with 8%.
Axis Bank accounted for about 6% of industry net additions despite having more than 13% of the industry's cards-in-force.
In July, HDFC Bank added approximately 2.30 lakh cards, the highest absolute addition of all major issuers. SBI Cards added approximately 1.83 lakh cards in July.
Jefferies estimated that SBI Cards' share of industry net additions was around 16%, while its net additions increased 2.7 times YoY.
Industry cards outstanding increased around 1% MoM and 9.9% YoY to approximately 12.29 crore cards in July.
ICICI Bank Adds Cards Despite Weak Spending
ICICI Bank also continued to expand its card base. Its cards outstanding increased around 9% YoY, making it the strongest-growing major issuer on this metric in the July data.
Even so, spending performance was still weak.
Morgan Stanley’s YTD FY27 data showed ICICI Bank’s credit card spending falling 6% YoY.
The contrasting trends highlight an important problem facing the industry: increasing the number of cards does not automatically result in an increase in spending.
For issuers, the ability to activate new cards and encourage higher spending among existing customers will remain important to converting card-based growth into revenue growth.
Spending Growth Varies Across Issuers
The credit card spending momentum is still uneven across banks and financial institutions.
Morgan Stanley’s YTD FY27 numbers showed HDFC Bank spending up 14% YoY, while SBI Cards increased 26%, Yes Bank grew 20%, IDFC First Bank grew 20%, Federal Bank jumped 57%, and AU Small Finance Bank increased 31%.
On the negative side, ICICI Bank's spending declined 6% YoY, while IndusInd Bank experienced a 47% YoY decline.
The large divergence between issuers suggests that the overall moderation in industry spending is not affecting every company equally.
Online Spending Continues to Gain Importance
The credit card market is also seeing a continued shift towards digital and online transactions.
Morgan Stanley also said the industry's online spending mix increased 100 basis points month-on-month to 64% in July.
SBI Cards went in the opposite direction, with its online spending mix decreasing by 100 basis points MoM.
Retail digital spending, excluding NEFT, increased 18% YoY to Rs 44.7 trillion in July, as compared to 19% growth in June.
According to the most recent data, credit cards accounted for around 4.7% of retail digital spending excluding NEFT. That was down 40 basis points from the previous month but still largely consistent with the previous month.
What Can the July Data Mean for Investors?
The latest credit card data presents both positive and negative signals for the sector.
On the positive side, the number of cards in circulation is growing, transaction volumes are strong, and several issuers are seeing healthy spending growth. Credit card adoption and usage remain structurally strong. The concern is that spending growth is not keeping pace with card additions or transaction growth.
The 24% YoY increase in transactions compared to spending growth of around 7-8% indicates that average ticket sizes are under pressure. Similarly, the decline in spending per card suggests that simply increasing the number of cards may not be sufficient to generate stronger spending growth.
For SBI Cards, the picture is particularly mixed. Its 22% YoY July spending growth is still well above industry growth, but the 140-basis-point sequential decline in market share should be monitored.
As the industry moves forward, investors will be more interested in whether transaction growth can eventually translate into higher spending per card. If ticket sizes are up and the number of cards coming to market is up, then spending growth in the industry could be even higher.
Until then, India's credit card market might continue to experience a volume-led rather than value-led growth pattern, and investors and brokerages may remain cautious even with more card additions.
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