Credit card spending by Sri Lankan cardholders saw a notable surge in August, signaling improved consumer confidence and stronger household incomes amid a steadily expanding economy.

According to data from the Central Bank, credit card debt increased by Rs. 2.89 billion during August, marking a sharp rise compared to Rs. 373 million in July.

The growth in credit card spending coincided with an acceleration in overall private sector credit expansion.

Licensed commercial banks issued Rs. 221.6 billion in loans to the private sector in June, followed by over Rs. 200 billion in new loans during July and August.

By the end of August, total outstanding credit card debt had risen by Rs. 6.21 billion to reach Rs. 164.17 billion.

The surge occurred despite the high interest rate on credit cards, which remains around 26 percent per annum well above most other lending rates.

Financial analysts attribute the increase to greater consumer spending on both essential items and non-essential categories such as entertainment, dining, and leisure, suggesting a rebound in middle-class purchasing power.

As of August, Sri Lanka had 2,102,537 active credit cards, reflecting an increase of 14,468 compared to July.

During the first eight months of the year, licensed commercial banks issued a total of 94,081 new cards, showing steady growth in credit card adoption across the country.