The festive season didn't save the credit card ledger. Total spending fell 5.9% year-on-year to ₹2.04 lakh crore in September 2026, marking the first annual contraction since February 2021. It’s a jarring number for a sector that has consistently posted double-digit growth. But context matters. Last year, the GST rate cuts and early festive online sales in September 2025 created a massive base, pushing spending up 13.3% month-on-month that month. This year, retailers and banks shifted the heavy hitting to October, distorting the September comparison.
The slowdown isn't just a calendar trick. Growth was already decelerating before the festive window opened. July-August spending growth slowed to 6.7% from 7.9% in Q1 FY27. For the first half of FY27, total spend grew just 4.9% to ₹12.18 lakh crore, with Q2 growth dropping to 2.1%. CareEdge Ratings notes that the August-September 2026 period combined showed only a marginal 0.4% decline, suggesting the September dip is largely a timing issue, but the underlying momentum has clearly cooled.
The real story is in the ticket size. Transactions are surging, but the value is shrinking. Credit card transactions jumped 23.2% YoY to 61 crore in September, and outstanding cards grew 10.5% to 12.53 crore. Yet, average spending per card fell 14.8% to ₹16,305, and average transaction value crashed 23.6% to ₹3,343. Asit C Mehta Investment Intermediates (ACMIIL) flagged a similar trend, citing a 23.4% drop in average transaction value. This points to a behavioral shift: consumers are tapping cards more often for smaller, UPI-linked payments rather than high-value purchases. SBI Card’s Q2 FY27 data, showing ₹21,300 crore in UPI-linked spends, underscores this fragmentation.
Channel dynamics are shifting too. Online spending, typically the engine of credit card growth, dropped 12.5% YoY to ₹1.26 lakh crore. Point-of-sale (PoS) spending at physical merchants, however, rose 7.2% to ₹77,751 crore. Online’s share of total spend fell 469 basis points to 61.7%. CareEdge Ratings attributes the online dip partly to weaker air travel bookings, which are heavily online-dependent, and the high festive base from last year. ACMIIL’s data adds nuance: online spending actually grew 2.5% sequentially in September, while PoS spending dipped 2% from August. So, online remains the dominant channel, but offline is picking up steam.
Market share is being redistributed. HDFC Bank was the only major issuer to post YoY growth in spending, up 7.7%, lifting its industry share to 32%—a 165-basis-point gain from August. ICICI Bank saw spending plunge 26.3% YoY, while SBI and Axis Bank fell 14.1% and 11.1%, respectively, per ACMIIL. Public sector banks other than SBI saw spending jump 26.3% YoY, with their share rising to 3.30% from 2.46% a year ago. Private sector banks still hold 73.78% of the market, but HDFC is consolidating its lead.
Looking ahead, CareEdge Ratings projects spending to rebound to ₹2.28-2.38 lakh crore in October as festive sales fully kick in. November should also see strong activity driven by Diwali-related purchases. The key question for investors: is the September dip a one-off timing artifact, or the start of a structural slowdown in consumer credit? Watch HDFC’s ability to sustain its share gain against the broader industry’s cooling momentum in the coming quarters.