SAJIBUR RAHMAN
| Published: October 13, 2023 23:59:45
Credit-card spending surged to Tk 2.43 billion in August, registering a 4.09-percent increase from July’s Tk 2.34 billion, according to Bangladesh Bank (BB) data.
Nearly half of all transactions made with credit cards in August occurred at departmental stores, data showed. Bankers point to rising costs of both food and non-food items as the driving force behind the surge in card spending.
With inflation in August hitting 9.92 per cent, bankers argue that the uptick in card spending underscores a deepening cost of living crisis, implying that people are shelling out more for daily essentials.
Credit cards offer a convenient solution for immediate cash needs, enabling users to withdraw money from ATMs and make various purchases without the hassle of handling physical currency.
Moreover, cardholders benefit from a grace period of up to 45 days for repayment, without incurring interest charges. These cards are not confined to domestic use; they also facilitate transactions in foreign currencies, both within the country and abroad.
Interestingly, while domestic transactions have risen, there has been a decline in credit card usage for international transactions.
Bangladeshi credit card holders made about twice as many transactions outside the country as foreign credit card holders did within Bangladesh in August, according to the BB report.
The transactions made with credit cards within Bangladesh by foreign nationals increased to over Tk 2.18 billion in August 2023, up from over Tk 1.91 billion in July 2023. This marked a 14.11 per cent increase compared to July 2023.
On the other hand, credit card transactions by Bangladeshi nationals outside the country totalled over Tk 4.17 billion in August 2023, down from Tk 5.11 billion in July 2023. This represented an 18.35 per cent decrease compared to July 2023.
Professor Dr Md Salim Uddin, chairman of the Executive Committee of Islami Bank Bangladesh Limited, said the increase in credit card expenditures corresponds to the general rise in product prices in the market.
He said credit card holders are increasingly relying on plastic money to cope with the current cost of living crisis. Nevertheless, there are individuals with ample funds in their personal accounts who are choosing to use the card more frequently.
Central bank data revealed that a significant portion of credit card expenditures in August occurred at department stores, accounting for 49.99 per cent of all transactions.
Retail establishments accounted for 12.34 per cent, utilities for 9.16 per cent, and cash withdrawals for 7.97 per cent.
Moreover, specific sectors also witnessed substantial credit card activity, including 5.95 per cent on medicines, 4.51 per cent on clothing, 3.44 per cent on transportation, 3.37 per cent on funds transfer, 2.18 per cent on business services and 0.99 per cent on other activities.
In July, 73.45 per cent of credit card transactions involved Visa cards, while 16.20 per cent used MasterCard, indicating their dominance in the market.
In August 2023, the highest number of transactions among foreign nationals was carried out by US nationals. About 25.34 per cent of the transactions were made using credit cards issued by the USA.
The remaining transactions using cards issued by other countries included the UK (12.39 per cent), India (10.92 per cent), Singapore (3.74 per cent), Canada (3.57 per cent), Colombia (3.50 per cent), Japan (3.43 per cent), Hong Kong (3.33 per cent), Honduras (2.75 per cent), UAE (2.58 per cent), Australia (2.37 per cent), China (2.05 per cent), Saudi Arabia (2.00 per cent) and other countries (22.02 per cent).
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