The pandemic and its effects have transformed every aspect of life, including attitudes, actions, and behaviours when it comes to money. By analysing credit card spending behaviour in 2020 of India’s most creditworthy people, CRED has found that the caution exercised during the days of lockdown transformed selectively into exuberance during the festive season and has stayed there since.

That said, CRED observed some fundamental, long-term shifts in how Indians manage their money – by becoming more agile and careful, and increasing digital’s share of wallet, letting them pursue indulgences of choice more boldly, while still remaining cautious about spending in general.

Data found that CRED members have spent 6% more on shopping and food on their credit cards during the festive season compared to even pre-COVID times indicating an extremely positive outlook to indulging themselves.

Though not rapid, CRED found that the credit card spends across other segments such as travel, banking and finance as well as digital payments have started increasing compared to lockdown and post-lockdown phase.

This shows that members’ sentiment towards spending is cautious still and showed a greater move towards plastic which will only improve in the year ahead. However, categories such as health and wellness, and infotainment have been last on the priority list of credit card spending for members.

Indulgent Pursuits Helped Members Stay Afloat

To survive the lockdown and during these dreary work from home days, CRED members have indulged in at-home experiences and retail therapy to overcome their blues. This is evident from shopping and food seeing the highest credit card spends through the year and recovering to more than pre-COVID-19 levels at the end of 2020.

Shopping and food incurred maximum indulgence with the most credit card spends by members averaging almost 36% of total credit card expenditure throughout the year.
During the pre-lockdown phase, members used 35% of their plastic money to buy items that they’ve been eyeing for a while or exploring various cuisines from the comforts of their homes. This rose to 41% during the festive season to ring in new beginnings.

Members in Chennai have spent 40.25% on shopping and food during the year, Bangalore is a close second with 39% spends, while Hyderabad is the city with the least spends on this category at 32.75%. Other cities including Kolkata, Mumbai, Delhi and Pune have spent 34.25%, 34.25%, 33.25% and 36.25%, respectively.

On average, the month of October 2020 saw the highest spends on food and shopping with 48% of total card spends across cities.

Responsible Financial Behaviour is on the Rise, Again

With contactless becoming the new means of payment, CRED members chose to use their credit cards even for basic necessities! Change in the allocation of expenditures from cash to credit reflected as soon as the pandemic hit.

With digitisation taking over our lives, CRED members relooked their finances to ensure that they are prepared for a ‘rainy day’ with most of them moving to credit cards to make their banking and finance payments, such as topping-up insurance policies and EMIs, as well as necessities such as utilities and digital wallets.

However, the pandemic disrupted payment cycles and financial discipline during the lockdown but good thing, post-lockdown timely payments are back!

EMIs, which comprised less than 3% of credit card spends across cities in 2019, rose to 8% among members in Ahmedabad and 7% in NCR. The contribution of EMI to credit card spends rose in all cities except in Kolkata.

While, spends on banking and finance increased by 6% from 23% of total spends during pre-lockdown to 29% during the lockdown, indicating that members were trying to save by not making timely payments accruing late fees, penalty and interest charges. There has been a decline since then with post-lockdown recording 22% and festive season spends dropping to 17% of spends. People are back to making timely payments and demonstrating responsible financial behavior.

Mumbai has spent 28% on securing finances and banking online, with the month of February accounting for the highest spends, up to even 95%! The first half of 2020 was dominated by banking and finance (35%) having the most spends; while the second half was dominated by shopping and food (40%). Clearly, the mood shifted from securing to indulging cautiously!

Insights from CRED members’ spends show that there has been an increase of 3% of utility bills being paid on their credit cards from the pre-lockdown phase (4%) to the lockdown phase (7%).

An increase of 3% in digital wallet payments has been observed from pre-lockdown (18%) to lockdown (21%).

Safety Came First as Travel Took a Backseat

Though it seems obvious, with restrictions on movement due to the pandemic, physical experiences like intra and inter-city travel have seen a sharp decline. However, this segment is also seeing a slow but steady revival as more people are stepping out now post-lockdown.

Travel dipped by 9% from the pre-lockdown (15%) phase to lockdown (6%), making it the only category with the highest decline in spends.

That being said, travel has increased by 2% from lockdown (6%) to post-lockdown (8%), and further by 1% from post-lockdown to the festive season (9%).

Across all cities, Pune recorded the highest spends in the category at 12%, with CRED members from the city going out and about exploring and vacationing.

Indulging But Cautiously!

CRED members are indulging but not splurging without thought. This is evident, and very surprising too, from the expenditure on fitness, health, wellness and infotainment which have remained consistently low, at only 3% of total credit card spends, through the year. This despite a nation-wide lockdown in the middle of the year!

Bangalore and Chennai are the only two cities that have recorded higher spends with 4% on health and wellness, and 3% on infotainment by raking up online courses or subscribing to OTT platforms.

For members in Ahmedabad, health and wellness and infotainment are not categories they spend on. The city records the least spends, across India, with 2.25% on health and wellness and 2.75% on infotainment.

Automobile and fuel spends reduced sharply with pre-lockdown spends constituting 15% compared to festive season spends accounting for only 9%.

Methodology and Sample Size:

For this analysis, CRED analysed the share of credit card spends of over 1 million members across Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune, out of the total 5.9 million members.

The data and insights gathered from the study help in understanding larger trends reflected in spending behaviour of affluent consumers across four time periods – Pre-lockdown (December 2019-March 2020), During lockdown (April-June 2020), Post-lockdown (July-September 2020) and finally the festive season (October-December 2020). Data analysed is relative credit card spends made across categories, aimed at providing direction on the types of purchases members are using their credit cards for.

The data capture results across various expenditure categories where CRED members made payments on their credit cards such as banking and finance, travel, fitness and wellness, infotainment, food and shopping, wallets and digital payments, and utility bill payments.

Your thoughts, please