China’s Credit Card Market Continues to Shrink, Down 100 Million Cards in Just Three Years

China’s Credit Card Base Shrinks by Another 8 Million in Q3, Down Nearly 100 Million in Three Years

China’s credit card market continued its downward trajectory in the third quarter, shedding another 8 million cards. According to the People’s Bank of China’s 2025 Q3 Overview of Payment System Operations, total issued credit cards and dual-purpose credit–debit cards stood at 707 million by the end of September, down from 715 million at the end of the second quarter.

Compared with the historic peak of 807 million cards recorded in the same period of 2022, the market has contracted by nearly 100 million cards over the past three years. Notably, the decline has now persisted for 12 consecutive quarters.

Credit card industry expert Dong Zheng noted that these figures not only confirm a sustained contraction in market size, but also signal the end of the long-standing growth model that relied heavily on aggressive card issuance.

Rising Bad Debt Adds to Banking Pressure

At the same time, asset quality pressures are mounting. By the first half of this year, the non-performing loan (NPL) ratio for credit cards had climbed to 2.40%, significantly increasing stress across the banking system. Many institutions have responded by accelerating the bulk transfer of overdue assets through the China Banking Asset Registration & Trading Center.

In November alone, personal consumer loan NPL packages totaling more than RMB 10 billion were successfully traded, underscoring the speed at which banks are moving to de-risk their balance sheets.

Credit Card Scale Continues to Slide

Looking back, China’s total number of credit cards and dual-function cards still exceeded 800 million in the third quarter of 2022. By the end of that year, the figure had dropped to 798 million, marking the beginning of a prolonged downward cycle that has continued to this day.

From an operational standpoint, credit card business volumes have also clearly contracted. According to Wind data and banks’ financial reports, the combined outstanding balance of credit card loans at major state-owned and joint-stock banks reached about RMB 7.5 trillion in the first half of 2025, down nearly RMB 600 billion from the end of 2024. Meanwhile, total credit card spending fell roughly 8% year-on-year.

China Merchants Bank remained the industry leader with transaction volume of RMB 2.021 trillion, though this still represented a year-on-year decline of 8.54%. Bank of Communications recorded an even steeper drop of 11%.

On the issuance front, several banks have actively reduced their existing card base and cleared inactive “sleeping cards.” For example, Postal Savings Bank saw its outstanding credit card stock fall from 40 million to 38 million, while Bank of Communications declined from 63 million to 60 million.

Transaction Volumes Remain Under Pressure

Historical data show that by the end of 2024, all six major state-owned banks posted year-on-year declines in credit card consumption, with Bank of Communications and Postal Savings Bank each falling by more than 12%.

In the first half of 2025, most mid-to-large banks continued to report shrinking transaction volumes. The declines were particularly pronounced among joint-stock banks. Aside from China Merchants Bank, China CITIC Bank posted transaction volume of RMB 1.0854 trillion, down 12.54% year-on-year, while Ping An Bank recorded about RMB 989.8 billion, plunging more than 16.8%.

Dong Zheng explained that the contraction of the credit card market is the result of multiple overlapping factors. Regulatory tightening acted as a “starter’s gun,” forcing banks to abandon extensive issuance strategies and aggressively clean up low-activity accounts. At the same time, shifts in the payment ecosystem—especially the rapid penetration of mobile payments and internet-based credit tools—have increasingly replaced credit cards in small, high-frequency consumption scenarios. In addition, banks themselves are strategically shifting their focus from scale expansion to refined operations and stricter risk management.

Non-Performing Assets Continue to Rise

Even as overall card volumes decline, asset quality pressure has become increasingly visible. By the end of the second quarter of 2022, outstanding credit card loans overdue for more than six months totaled RMB 84.285 billion, accounting for 0.98% of outstanding balances. By the end of 2024, this figure had surged to RMB 123.964 billion, pushing the ratio up to 1.43%.

According to a recent Deloitte report, the average NPL ratio for credit card overdrafts at 12 domestic banks reached 2.40% as of June 2025, up from 2.33% at the end of 2024. ICBC, Industrial Bank, and Bank of Communications recorded particularly high ratios of 3.75%, 3.28%, and 2.97%, respectively.

Guosen Securities stated in a recent research report that risks in retail lending are now fully emerging as a central challenge to asset quality. Rising default rates are being observed across mortgages, consumer loans, credit card loans, and personal business loans. While the pace of deterioration in credit card NPL ratios has moderated recently, many retail-focused banks continue to face elevated levels of new bad debt formation.

Banks Accelerate Risk Disposal Through Asset Transfers

Against this backdrop, banks have stepped up their efforts to offload on-balance-sheet risks. In November alone, personal NPL asset packages worth more than RMB 26 billion were listed for transfer through the asset trading center, covering both consumer loans and credit card overdrafts.

Typical large transactions included China Minsheng Bank’s credit card center, which on November 14 listed its “2025 Sixth Batch of Personal NPLs (Credit Card Overdrafts)” with outstanding principal and interest totaling approximately RMB 51.42 billion—the largest single package in recent months. SPD Bank and Bank of Communications also listed major packages worth RMB 3.461 billion and RMB 1.79 billion, respectively.

Many of these non-performing asset packages share the characteristics of being “non-litigation” cases with relatively shorter delinquency periods. On November 24, Postal Savings Bank, Ping An Bank, and the Hunan branch of China Construction Bank simultaneously listed credit card NPL transfer projects totaling RMB 2.131 billion in outstanding balances. Among them, Postal Savings Bank alone involved 81,985 loans with RMB 1.297 billion outstanding and a weighted average delinquency of 1,804 days. Ping An Bank’s two batches totaling RMB 805 million were entirely non-litigated, while the CCB Hunan project, though smaller, had also not yet entered judicial proceedings.

Operating Model of Credit Card Business Undergoing Structural Adjustment

In recent years, rising NPL ratios and market contraction have pushed banks to adopt aggressive cost-cutting and efficiency-enhancing strategies.

On one front, banks have been closing standalone credit card centers. Over the past year, Bank of Communications alone has shut down dozens of Pacific Credit Card Center outlets across major cities including Beijing, Shanghai, Shenzhen, and Guangzhou. On another front, several banks have merged their credit card operations into broader retail banking divisions, ending independent tracking while shifting marketing and post-loan management down to regional branches and grassroots-level units to reduce operating costs and strengthen risk controls.

A Leaner but More Sustainable Future Ahead

Dong Zheng believes that the future value of credit cards will shift away from stimulating overdraft spending toward delivering safer, more convenient, and higher value-added integrated financial services tailored to different customer segments. Under the macro policy environment of expanding domestic demand and boosting consumption, a slimmed-down and restructured credit card business is still expected to develop steadily and continue to play a vital role in the payment system and consumer finance sector.

He further added that as industry competition intensifies, the “Matthew Effect” will become increasingly pronounced. Resources, customers, and profits will continue to concentrate in leading banks with strong risk control capabilities, solid customer bases, and superior service quality. For small- and mid-sized banks, the key to future competition will lie in uncovering high-potential clients under controlled risk conditions and strengthening long-term customer loyalty.