Credit card spending grows despite economic slowdown
This is the title of a news on TNA. Back luck, I follow carefully the data of Bank Of Thailand about credit cards since more than one year…
The article says :
The BoT Financial Institution Policy Group reported the number of credit cards in the financial institution system in October totaled 12,867,379, up 186,415 or 1.47 per cent from September.
The spending through credit cards in October totaled Bt 76.45 billion, up 2,078 or 2.79 per cent.
Data are correct. What is misleading is the comparison month-on-month. A comparison year-on-year is more appropriate to find the long terms trends and movements.
And in this case, the number of cards increased 8,5 % (compared to october 2007)… and spendings went up… by 1,45 % only.
In other words : more and more cards, less and less spendings (per card).
You see : a healthy growth ! 185 415 new cards (accounts) were issued in october ! The second highest month… since january 2006.
The banks and financial institutions are printing cards like there is no… crisis.
But problem : spendings have reached a plateau.
Therefore : average spending per card is going down. And absolutly not “up” like TNA says.
And the growth rate (y-o-y) in percentage is really clear : the growth rate is falling. From +20 % beginning 2006…. to +1,45 % in october… The lowest point.
The forecast here is easy to make : soon, we could have negative growth.
And we will have certainly a continuous decline in average spending per card (because I believe that the total number of cards will continue to increase).