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Credit Card Profits Squeezed: Issuers Seek New Revenue
23 Sep
Summary
- Interest-bearing balances now make up only 11% of annual card spending.
- Card spending grew nearly 27% annually, but revolvers declined sharply.
- Issuers are pushing EMIs and fee-based products for revenue generation.
Credit card companies are experiencing a structural shift away from traditional revolving credit models. As fewer customers carry balances month-to-month, interest-bearing receivables are growing at a slower pace than overall transaction volumes. This trend has prompted issuers to explore new revenue streams.
Strategies include converting point-of-sale purchases into equated monthly installments (EMIs) and expanding personal loan-on-card offerings. Fee-based products are also becoming more crucial for extracting income from a market increasingly treating credit cards as a payment tool rather than a borrowing facility.
Data indicates a substantial decline in interest-earning assets. Revolver balances alone have fallen to approximately 2.8% of card spending in the June quarter of 2026, down from about 7% in 2019. Including EMI loans, these interest-earning receivables have decreased to 55% from 60% a year prior, despite continued expansion in card usage.
