– Fuel credit cards were the most in demand in Tier 2 and Tier 3 cities in 2023 due to rising fuel prices, whereas demand for travel and e-commerce credit saw a substantial increase during the year.

“Due to rising fuel expenses, fuel credit cards have gained popularity in Tier-2 and Tier-3 cities and remained in maximum demand, witnessing 17 per cent y-o-y growth in 2023,” as per a consumer study by fintech platform ZET.

These cards typically provide cashbacks, rewards points, or discounts on fuel purchases, making them attractive to a wide range of consumers, including those residing in smaller cities and towns, the report said, adding that BPCL SBI, Indian Oil Kotak, and IDFC HPCL were the three most popular credit cards in this category.

Increased adoption

Tier-2 and Tier-3 towns and cities also saw increased adoption of travel credit cards, which grew the fastest in 2023 by 27 per cent y-o-y on the back of offerings such as air miles, hotel discounts, or travel-related rewards.

Increasing connectivity and infrastructure development in these cities also contributed to the rise in travel credit card usage, with more people from these regions exploring travel options, the report said, adding that demand was highest for SBI IRCTC, Axis Vistara, and IDFC Vistara credit cards.

E-commerce cards were the third most popular category due to increased internet penetration and an improved logistics and delivery ecosystem. Demand for e-commerce cards that offer rewards, cashbacks, or discounts on online shopping grew 24 per cent y-o-y in 2023, with Tata Neu HDFC, Swiggy HDFC, and Axis Flipkart being the most in-demand choices.

Jaipur and Surat were the top cities for fuel and travel cards, whereas Malappuram was the top city for e-commerce cards. Indore, Gurgaon, Kozhikode, and Thiruvananthapuram were among the other top cities to see robust credit card growth.

The report also highlighted a 19 per cent on year increase in new-to-credit (NTC) credit card holders, with almost 50 per cent of consumers being less than 25 years of age. The most preferred cards for these consumers were AU Small Finance Bank, SBI, and Axis Bank credit cards.

“In India, credit card penetration is low at just 5 per cent of the population, but we are witnessing a rise in adoption in the last two years, and as per the RBI’s estimates, the number of credit card owners could rise to 10 crore by early 2024 from 7.5 crore in April 2022,” said Manish Shara, Co-Founder and CEO, ZET, adding that factors such as increased urbanisation, rising disposable incomes, growing aspirations, and the government’s push towards digital transactions are encouraging adoption.

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