The credit card is one of the most common forms of consumer lending. Credit cards allow consumers to borrow money up to a certain limit in order to purchase goods and services. Cardholders typically have a grace period of 20-30 days in which they can repay the borrowed funds without incurring any interest charges. However, if the balance is not repaid in full during the grace period, interest will be charged on the outstanding balance. credit cards typically have relatively high interest rates compared to other types of consumer lending, such as mortgages and car loans.
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Data for today’s episode is provided by Mercator Advisory Group’s Viewpoint: Russian Credit Cards Will Lose Relevance as Their Economy Tumbles
Four Banks Dominate Consumer Lending in Russia
- Sberbank handles 40.4% of credit cards and 40.5% of consumer lending in Russia.
- Tinkoff Bank handles 14.9% of credit cards and 10.2% of consumer lending in Russia.
- Alfa Bank handles 11.0% of credit cards and 6.8% of consumer lending in Russia.
- VTB handles 6.2% of credit cards and 3.0% of consumer lending in Russia.
Russia was primarily a cash economy until 2012, when payment cards began to displace cash. Recent global events indicate that domestic card usage will continue, with growth in debit transactions, but credit card volumes will languish.
Russia’s domestic payment scheme will keep transactions flowing within the country. Still, it faces challenges in global acceptance and will not be capable of supporting a robust credit card function as the economy weakens as a result of the international sanctions.