Core Insights - The credit card market in 2025 is undergoing a significant contraction, with a total issuance of 707 million cards, down from a peak of 807 million in 2022, indicating a loss of nearly 100 million cards in three years [1][2] - The industry is experiencing a "structural collapse," particularly among state-owned banks, with notable declines in card issuance and increased non-performing loan rates [2][3] - The shift in consumer behavior is evident, with younger generations showing a high rate of card cancellations and a significant portion of the population opting not to hold credit cards at all [1][12] Market Dynamics - The total number of credit cards has decreased significantly, with a drop of 1 million cards in just six months, reflecting a broader trend of declining loan volumes and transaction amounts [1][2] - Major banks are closing credit card centers, with 63 centers shutting down in the year, indicating a shift from centralized operations to localized management [3][4] - The average customer acquisition cost for credit cards has risen to nearly 300 yuan, while the profit generated from low-efficiency customers is less than 50 yuan per year, leading to unsustainable business models [4][5] Risk Exposure - Non-performing loan rates have surged, with major banks reporting rates above 3%, and smaller banks facing even higher rates, indicating a significant risk exposure in the credit card sector [4][5] - The trend of selling off bad debts is increasing, with banks like Minsheng and Huaxia listing substantial amounts of non-performing credit card loans, reflecting the industry's struggle with asset quality [5][6] Strategic Shifts - Leading banks like China Merchants Bank are redefining their credit card strategies, focusing on integrating credit cards into broader retail banking ecosystems rather than merely as credit tools [6][7] - Banks are moving towards a model that emphasizes customer engagement and value creation, with a focus on enhancing customer experience through integrated services [12][14] - The industry is witnessing a transformation from traditional credit card offerings to more tailored products that meet specific consumer needs, such as lifestyle and essential services [15][16] Consumer Behavior - Younger consumers are increasingly rejecting traditional credit card offerings, with 37% of those born in the 1990s actively canceling cards and 42% of those born in the 2000s never having held a card [1][12] - The shift in consumer preferences is leading to a decline in card usage, with many opting for alternative payment methods that offer greater convenience [12][13] - The traditional incentives for credit card acquisition, such as promotional gifts, are losing effectiveness, prompting banks to rethink their marketing strategies [12][15]