Tax break spurs spending on credit cards
THE SHOPPING tax break has helped motivate consumers to decide to use their credit cards during the last days of the year, according to Kasikorn Research Centre.
The research house surveyed 500 credit cardholders on credit card spending during the year-end and New Year festive period.
Almost 100 per cent answered that they are thinking of using credit cards during the period.
Seasonal gifts, domestic travel and dining were the top three purchases for them.
The tax incentive, which allows a taxpayer to deduct domestic purchases of goods and services from December 15-31 from personal income taxes, helped drive the buying decision.
However, spending over the period this year is expected to drop to Bt12,000 per cardholder from Bt13,700 last year as consumers have become more cautious about spending out of fear of the debt burden.
The tax breaks for shopping and domestic travel packages and the rise of online payments will help boost spending via credit cards in the financial system by Bt100 billion this year from Bt1.36 trillion in 2015.
Credit cards issued by commercial banks are expected to grow by 6 per cent this year, the same speed as last year, as banks have slowed down on acquiring new customers and increased their caution on late payments.
The promotion of zero interest rates for instalments is another factor of the volumes of full amount of debt payment is not crowded as before.
The credit card business in 2017 will still be in the caution mode as far as spending of credit cardholders is concerned, making growth not as outstanding as in the past several years.
Growth should be 6-8 per cent or Bt1.44 trillion-Bt1.47 trillion.
The launch of the National e-Payment scheme is an extra trigger to boost spending, as the government will expand electronic data capture terminals to cover small merchants nationwide.
Credit card operators will focus on the first jobber segment – those who have never held a credit card or been in debt before.
For existing customers, credit card operators will focus on those who have a good debt repayment record in order to increase fee income from spending.
The potential for new credit card expansion is regarded as limited, so the growth of credit cards in 2017 will be at a similar pace as this year – 6.5-7.5 per cent – representing 1.52 million-1.75 million credit cards.
