Sri Lanka Credit Card Usage: Economic Indicator or Sign of Rising Debt?
Colombo, Sri Lanka – A recent surge in credit card usage across Sri lanka has sparked debate about the nation’s economic health.while some experts view this trend as a positive sign of recovery and increased consumer confidence, others worry it may mask underlying financial vulnerabilities.
Credit Card Growth in Sri Lanka
Data from the central Bank of Sri Lanka (CBSL) reveals a notable increase in credit card activity. Outstanding credit card balances climbed from Rs. 155,455 million in March to Rs. 159,836 million in April, indicating an expansion of Rs.4,381 million in credit card debt issued by licensed commercial banks during that month.
The number of active credit cards also saw an uptick, rising from 2,038,682 in March to 2,055,494 in April. This translates to 16,812 new cards issued in April alone, bringing the total number of new cards issued in the first four months of the year to 47,038.
Did You Know? The holiday season typically sees a spike in credit card usage.
Experts Weigh In on Credit Card Trends
Wasantha Athukorala, a Professor of economics at the University of Peradeniya (UOP), suggests that increased credit card ownership can be a positive indicator.It can signal financial inclusion, technological advancement, and even economic recovery.
“When the economy is growing, growing numbers of people use credit and debit cards,” Prof. Athukorala stated. “It is indeed likely an indicator of increasing income, as if your income is increasing, you will probably use more credit cards, debit cards, and so on.”
Umesh Moramudali, a lecturer in the Department of Economics at the University of Colombo, echoes this sentiment, noting that rising credit card debt frequently enough indicates increased consumption, particularly among the middle class. He added that credit card usage signals growing consumer confidence, as it requires a stable income and the belief in future repayment capacity.
Pro tip: Monitor your credit card statements regularly to track spending and identify any unauthorized transactions.
Factors Driving Credit Card Adoption
Several factors contribute to the increasing adoption of credit cards in Sri Lanka. These include:
- Changing consumer behavior
- Increased banking sector competition
- Urbanization
- Growth of the modern retail sector
- Technological advancements, such as increased internet access and smartphone usage
Credit Card Defaults: A Cause for Concern?
While increased credit card usage can be a positive sign, a high default rate could indicate that people are relying on credit cards to cover essential expenses. Though,recent data suggests a decrease in credit card defaults.
According to the CBSL Payments Bulletin for the fourth quarter of 2024, the number of defaulted credit cards (payments in arrears for 90 days or more) stood at 157,622 in 2024, compared to 169,527 in 2023, representing a 7% decrease. The value of defaulted transactions also decreased by 2.4%, from Rs. 20.6 billion in 2023 to Rs. 20.1 billion in 2024.
Prof. Athukorala noted that data indicated a sign of economic recovery rather than increased cost of living. Global access has increased by 2% when comparing December 2024 with April 2025. Outstanding balance has also increased marginally; in December 2024 it was about Rs. 157 billion, which has increased to Rs.159 billion in April, marking a marginal change of about Rs. 2 billion.
Sri Lanka Credit card Statistics
| Metric | March 2025 | april 2025 | Change |
|---|---|---|---|
| Outstanding Credit Card Balance (Rs. Million) | 155,455 | 159,836 | +4,381 |
| Active Credit Cards | 2,038,682 | 2,055,494 | +16,812 |
Evergreen Insights: Understanding Credit Card Trends
Credit card usage is often seen as a barometer of economic activity. Increased usage can reflect greater consumer spending and confidence, while decreased usage may signal economic uncertainty. However, it’s crucial to consider other factors, such as interest rates, credit card fees, and consumer debt levels, to gain a thorough understanding of the situation.
Globally, credit card usage varies significantly across countries, influenced by factors such as economic development, financial regulations, and cultural norms. In developed economies, credit cards are widely used for everyday transactions, while in developing economies, cash transactions may still be more prevalent.
Frequently Asked Questions About Credit Cards in Sri Lanka
Are credit cards widely accepted in Sri Lanka?
Yes, credit cards are widely accepted in major cities and tourist areas in Sri Lanka, particularly in hotels, restaurants, and retail stores. However, it’s always a good idea to carry some cash for smaller establishments and rural areas.
What are the common credit card fees in Sri Lanka?
Common credit card fees in Sri Lanka include annual fees, late payment fees, over-limit fees, and cash advance fees. Interest rates on credit card balances can also be relatively high.
How can I manage my credit card debt effectively?
To manage credit card debt effectively, it’s essential to pay your bills on time, avoid exceeding your credit limit, and try to pay more than the minimum amount due each month. Consider creating a budget to track your spending and identify areas where you can cut back.
Disclaimer: This article provides general information and should not be considered financial advice. consult with a qualified financial advisor before making any financial decisions.
What are your thoughts on the increasing credit card usage in Sri Lanka? Do you think it’s a sign of economic recovery or a potential debt trap? Share your opinions in the comments below!
