Families finance their loans with credit cards: credit grows in a two-speed economy.

Credit expansion in Argentina over the last 15 months has been experienced with credit cards in hand in the vast majority of households. Credit card use is expanding: last month alone, it increased by approximately 20% in amounts and quantities , completely offsetting the use of debit cards, which were used 21% less in June than a year earlier. The data comes from the Central Bank's latest Retail Payments Report and reflects a consumer habit among many Argentines: financing expenses with plastic cards.

Looking back at the second quarter of the year, the Payway Index also reported an increase in credit card use, both in quantity and volume, and a notable drop in debit card use, two key drivers of the domestic economy. Compared to what happened from March to June 2024, during the same period this year, credit cards were used an average of 10% more; while in that same comparison, debit card use plummeted by more than 19%.

In many cases, the existence of installment plans, whether official or from the banks themselves, was what supported this type of consumption. Economist Ignacio Carballo, a professor, researcher, and director of the Alternative Finance Center at UCA, stated: "There are two major trends in what's happening in Argentina regarding credit right now. On the one hand, it's growing because there are more promotions and banks are opening up the market because the macroeconomic situation is better, and banks are able to grant more credit," he noted.

"The question is whether this trend doesn't show that people are more squeezed and have to go out and spend because they don't have liquidity at the moment. I think Argentina's credit-to-GDP ratios are extremely low, and the credit culture remains weak. Therefore, credit growth, in general terms, is good news," Carballo clarified.

" Generally, when people spend money with a credit card, they do so for a higher price, which also suggests that there's a middle class that spends more money this way, and this also explains the decline in debit card use," he added.

Debit cards are not only losing out to credit cards, but also to the expansion of digital payments , via instant transfers, and the perception of a reduced need for cash. "Withdrawal volumes are expected to remain stable. Fewer withdrawals are being made thanks to the availability of higher-denomination bills and the increase in withdrawal limits," detailed the Payway report.

On this point, the Central Bank's numbers are overwhelming: in June, the number of instant transfers between users grew by more than 19%, while the amounts increased by more than 34%, in line with inflation over the last twelve months. Here, the participation of virtual wallets in the management of daily finances is growing: almost 76% of these transactions originated and/or were sent to an account associated with a Uniform Virtual Key (CVU, which is used to identify accounts in non-bank wallets).

At the same time, the use of contactless payments via cell phones and NFC technology is growing. These have skyrocketed since the opening of payments on public transportation and the fierce competition with discounts of up to 80% deployed by various players in the financial system to attract their use. According to Payway, contactless payments now represent eight out of ten in-person transactions, with NFC wallets and the expansion of payments on public transportation standing out.