3 days ago
Digital shift keeps Saudi credit card borrowing above $8bn and just 2% below record level
RIYADH: Credit card loans from Saudi banks posted their second-highest figure on record in the first quarter of 2025, after an annual rise of 12.53 percent.
According to the Saudi Central Bank, also known as SAMA, this borrowing of SR30.66 billion ($8.18 billion) is just 2 percent below the all-time peak recorded at the end of 2024.
SAMA figures also revealed that consumer loans reached SR479.78 billion in what was a 6.41 percent rise during the same period.
The vast majority – over 90 percent – of consumer lending falls into a broad 'other' category, which includes debt consolidation, personal family expenses, or any borrowing not classified under the specific purposes.
This indicates that many Saudis take personal loans for a range of needs, from home renovations to weddings, but each of those specific uses is a relatively small slice of the overall figures.
Multiple factors are supporting the rapid growth of the credit card segment. A central driver is the national push toward a cashless society under Vision 2030, which has seen SAMA implementing policies to promote electronic payments and reduce dependence on cash.
This includes expanding point-of-sale infrastructure, mandating that businesses accept electronic payments, and fostering fintech innovation. As a result, 79 percent of all retail transactions in 2024 were electronic, card or digital payments, up from 70 percent the year before, according to an April release by SAMA.
In parallel, banking penetration has expanded, with nearly all bank cards in the Kingdom now enabled for contactless payments. By 2023, 98 percent of in-person card transactions were contactless — up from just 4 percent in 2017— according to Visa executive Andrew Torre, speaking to Arab News in October.
The COVID-19 pandemic accelerated this shift to tapping cards and phones, ingraining cashless habits. With nearly 50 million payment cards in circulation and a decline in ATM usage, the ecosystem is primed for card spending over cash.
Another factor is consumer behavior and economic policy. Strong consumer spending in Saudi Arabia — supported by economic growth and initiatives to boost household income — has encouraged more use of credit for purchases.
Rather than delaying purchases, many consumers are comfortable using credit cards to buy now and pay later, especially with the availability of installment plans.
Additionally, banks and payment networks are actively marketing credit cards with attractive promotions. Cashback deals, reward points, airline miles, and no-fee installment offers are abundant, which incentivizes consumers to use credit cards for both large and small purchases.
The entry of Shariah-compliant credit cards has also played a role. By addressing religious sensitivities, Islamic banks have made credit cards acceptable to a wider customer base that previously avoided interest-based products.
Furthermore, the growth of e-commerce and digital services in Saudi Arabia has naturally increased credit card adoption. Online retailers, food delivery apps, ride-hailing, and travel platforms often work best with card payments, so as these services proliferate, so does card usage.
Consumer loan usage and slower growth trends
Credit cards and personal consumer loans differ fundamentally in structure, usage, and cost. Consumer loans in Saudi Arabia are typically taken as a fixed amount to be repaid in installments over a set term, usually at relatively lower interest or profit rates.
They are often used for significant expenses like buying a car, financing education, or other big-ticket needs, and come with a structured repayment plan that helps borrowers budget effectively.
By contrast, a credit card provides a revolving credit line up to a predefined limit, with no fixed repayment period as long as the borrower makes minimum payments.
Traditional consumer loans, which are often called personal loans, remain much larger in absolute terms than credit card debt in Saudi Arabia, but their growth has been relatively sluggish in recent quarters.
These loans — which exclude mortgages — totaled SR471 billion by the end of 2024, and saw annual growth in the mid-single digits compared to double-digit growth for credit cards.
In early 2024, growth was even slower. In the first quarter, consumer lending was up less than 1 percent year-on-year, and in the second quarter around 2 percent, before accelerating later in the year according to SAMA data.
The uses of consumer loans are generally for big one-time expenditures or needs. The largest defined sub-category is financing for vehicles, which accounted for roughly 2.5 percent to 3 percent of total consumer loans in 2024. Other specific purposes include education loans and loans for furniture and durable goods, and vehicle and private transport means.
The recent slower growth of consumer loans compared to credit cards can be attributed to a number of factors.
High interest rates over 2022 to 2023, as global rates climbed, made borrowing via fixed loans less attractive, potentially dampening demand. By contrast, credit card lines were often already in place and could be tapped without a new loan application.
Another factor is the growing availability of credit card installment plans and Buy Now, Pay Later services, which are increasingly used to cover expenses that previously required personal loans.
With zero-interest installment offers and flexible repayment options — particularly appealing to younger consumers — many now prefer to finance mid-sized purchases through these tools rather than committing to long-term bank loans.
All of this has led to personal loan growth being moderate. Nonetheless, consumer loans did rise in absolute terms, primarily driven by continued needs for cars, education, and other big expenses.
The credit card segment's growth outpaced consumer loans by a wide margin, highlighting a shift in how Saudis finance their spending toward more flexible, short-term credit and digital payment tools, and slightly away from traditional fixed personal borrowing.
