Millions of Chinese Consumers Ditch Their Credit Cards Amid Prudent Spending, Slow Economy

Why It Matters

The contraction of credit‑card usage erodes a key revenue stream for China’s banks and signals broader consumer caution, amplifying credit risk and limiting future earnings growth.

Key Takeaways

• Credit cards fell to 687 million, a 15% drop since 2022 peak
• Transaction value fell 11% YoY to ¥1.9 trillion (~$279 bn) in 2025
• ICBC’s credit‑card overdue debt hit 4.61% of total, up from 3.5%
• Regulators ordered banks to close idle cards and cap holders at three
• Weak spending and rising NPLs pressure Chinese banks despite modest profit growth

Pulse Analysis

The sharp decline in Chinese credit‑card holdings reflects a broader shift in consumer behavior as households prioritize savings over debt amid a faltering property market. Home‑price corrections have left many owners with negative equity, prompting tighter budgets and a retreat from high‑interest financing. This prudence is evident in the 11% year‑on‑year drop in transaction value, which fell to roughly $279 billion, indicating that even affluent urban shoppers are curbing discretionary purchases.

For banks, the fallout is two‑fold: revenue from interest and fees is shrinking while credit risk is rising. ICBC’s overdue‑debt ratio on credit cards climbed to 4.61%, well above the 3.5% level a year earlier, and other state‑owned lenders report similar trends. Regulators have responded by enforcing stricter inactive‑card rules and lowering the maximum number of cards a customer may hold from five to three, effectively throttling new issuance. These measures aim to curb over‑leverage but also compress the pipeline for future fee income.

Looking ahead, Chinese banks may pivot toward extracting more value from existing cardholders, leveraging data analytics to boost spend per active user and cross‑selling digital financial services. Meanwhile, the rise of mobile wallets and alternative credit platforms could further erode traditional card volumes. Investors should monitor NPL trends and profit margins closely, as the sector’s ability to adapt will determine whether modest profit growth—up 1.44% to about $319 billion in 2025—can be sustained in a cautious consumer environment.