Credit cards have become a popular part of modern spending.
From cashback offers and reward points to shopping discounts and airport lounge access, banks have used attractive benefits to encourage people to use credit cards more often.
Over the last few years, the credit card industry in India has grown rapidly.
Banks and NBFCs pushed card usage through pre-approved offers, easy approvals, and aggressive marketing campaigns.
As a result, India’s credit card market reached nearly $20 billion in 2025 and is expected to grow even bigger in the coming years.
But now, many users are noticing a major change.
Credit Card Rewards Are Getting Smaller
Several banks have started reducing benefits on their credit cards.
Cashback offers, reward points, and free services are no longer as generous as before.
One major change is airport lounge access. Earlier, many cards offered free entry without conditions.
Now, most banks require customers to spend a minimum amount before they can use lounge facilities.
Many cashback offers have also been reduced.
For example, Airtel Axis Bank earlier offered 25% cashback on Airtel bill payments through its app.
Now, customers must first spend at least Rs 12,500 on other eligible transactions to receive the benefit.
Annual Fees and Eligibility Rules Becoming Tougher
Banks are also increasing annual fees and making premium cards harder to keep.
HDFC Bank recently increased the annual fee of its Infinia card to Rs 12,500.
The bank also introduced a new condition requiring customers to spend Rs 18 lakh in a financial year or maintain a relationship value of Rs 50 lakh with the bank.
Similarly, American Express India increased the income requirement for its Platinum Travel card from Rs 4 lakh to Rs 7 lakh per year.
SBI Card has also reduced cashback benefits on its popular SBI Cashback Card. Earlier, users could earn up to Rs 5,000 cashback monthly on online spending.
Now, the limit has been reduced to Rs 2,000.
Why Are Banks Reducing Credit Card Benefits?
Experts say there are several reasons behind this trend.
One big reason is the rising cost of airport lounge services.
Earlier, companies like DreamFolks handled lounge access partnerships.
But after changes in the industry, banks now have to make direct deals with airport lounges, which has become more expensive.
Another reason is the growing number of credit card defaults.
The Reserve Bank of India has also asked banks to keep more funds aside for unsecured loans like credit cards.
Because of these extra costs and regulations, banks are cutting back on expensive reward programs.
Banks Now Want Premium Customers
Banks are slowly shifting their focus toward high-income and high-spending customers instead of mass-market users.
Reports suggest that credit card growth has slowed sharply in recent years.
Earlier, the sector was growing at over 20%, but now growth has dropped significantly.
To maintain profits, banks are now trying to attract customers who spend more and are less likely to default on payments.
For regular users, this means credit card rewards may continue to shrink while spending conditions become stricter in the future.
