Indians are pruning their Credit Cards?
There is always a love and hate relationship with credit cards. It’s one thing we want to get away with but really can’t. Some times out of conveniences and sometimes out of compulsion. While credit cards might change its form and morph into mobile money, the convenience of non-physical money is here to stay. How are we doing with our inseparable plastic money?
Not sure if this is good news or bad news, but there is a 2% decline in the credit card usage in 2011 when compared with 2010. Now before we get all worked up on the percentage points, let’s understand that these numbers are a result of HSBC survey of 5000 people across Asian countries in the 18-54 age group. Countries include : India, Hong Kong, Singapore, Taiwan, Malaysia, Australia, Indonesia and the Philippines
In India the number of card holders declined by 2% to 21% in 2011. The premium card holders rose by 29%. Platinum cards too rose from 18% in 2010 to 29% in 2011. Reasons for this steep rise : Rise in mass affluent section of the society and the companies focused sourcing of customers in high-income segment.
In India at least there seems to be some responsible credit card swiping. More and more consumers have reduced their credit cards and consolidated their spending onto one card. A feat which I tried to achieve in 2009. In India, single card holders have grown the most at 90%. Of those who held credit cards, Asian average is 2 cards per person. Singapore has an average of 3.3 cards per person, with Hong Kong and Taiwan having an average of 2.7 cards per person.
India’s credit card penetration rate isn’t known but Hong Kong (77%), Taiwan (55%) and Singapore (52%)has the most penetration rates. Again these percentages are from the number of people surveyed.
While pruning credit cards sounds like a good idea, one shouldn’t overdo it and probably shouldn’t do it too. If a person is holding four credit cards and on a simplification drive cancels two of the cards, it would hit the person’s credit score. By how much isn’t something we know readily and probably be best delivered by a credit score from CIBIL.
Pruning of credit cards by canceling them would hit your credit score. The next best option is to freeze the cards, literally. Better yet, cut it.
Via | Image