Why Indian banks sell credit card aggressively?

We all wonder why do banks give offers only for credit cards and not debit cards?

Interest Rates:

  • The primary way that banks make money is interest from credit card accounts. When a cardholder fails to repay their entire balance in a given month, interest fees are charged to the account. Credit card interest rate is the costliest in the world. Banks can charge up to .1% a day which goes to 36% a year, which is more than what many unregistered finance people lay.

Fee Structures:

  • In addition to interest revenue, credit card issuers often collect additional fee-based revenue from cardholders that are not associated with any type of expenditure, allowing the bank to realize a pure profit on these amounts. These fees will be collected on a yearly basis and the amount varies between banks.

Retailer Fees:

  • Every business that accepts credit/debit cards must pay either a regular fee or a commission on sales to the issuing bank. This revenue is associated with the cost of the technological infrastructure necessary to process charges from business customers, allowing the bank to realize a profit here as well.

Here is the answer:

After demonetization in November 2016, the central government of India, in order to promote digital transactions, made policy with the banks saying that “There should not be any swipe fees for debit card payments below 2000 rupees”. Here comes the fact. This was the primary reason for the aggressive marketing of credit cards. The reason is below


Suppose you are kind of person who hates debt. Your bank sells credit card to you free of cost without any verification. And you make payments through the card and repay it within the first 5 days of the month. There is no way the bank is profitable by giving you the credit card. The only way they make money is by making you purchase more. More you purchase, more swipe fee the bank earns. That is the reason you get so many offers and credit points for the transaction you do. Hope you all understood the fact behind the question. Cheers!!!



Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store