Axis Bank is updating its credit card policy starting August 28, 2026, including a hike in foreign transaction markups to 3.5%. The bank is also increasing late payment fees for large balances and tightening reward eligibility. These adjustments highlight an industry-wide push to manage credit costs and optimize yield in the competitive retail lending space.
Axis Bank has announced a series of revisions to its credit card terms and conditions, set to take effect from August 28, 2026. These updates affect multiple aspects of card usage, including international transactions, penalty structures, and reward point policies. For customers, the most significant change is the adjustment to the fee structure for foreign transactions.
Changes to Foreign Transaction Fees
The bank is increasing the Dynamic Currency Conversion (DCC) markup fee to 3.5% plus taxes. This fee applies when a cardholder chooses to pay in Indian Rupees while making a purchase abroad or with an overseas-registered merchant, rather than paying in the local currency. Previously, this fee was significantly lower for most cards at 1.5%. Investors should note that this change aims to align the bank's fee income more closely with current market dynamics and operational costs associated with international payments.
Late Fees and Payment Allocation
Axis Bank is also modifying its late payment fee structure for customers with larger outstanding balances. For credit card dues exceeding ₹50,000, the late fee will now be ₹1,300. While fees for smaller balances remain unchanged, this revision targets high-value credit card users.
Additionally, the bank is changing the order in which payments are allocated against outstanding dues. Under the new policy, payments will be applied first to fees and charges, then to EMIs, followed by interest and principal amounts. This shift ensures that the bank prioritizes the recovery of fees and interest over principal reduction, which is a common practice in the banking sector to manage credit risk.
Reward Program and Policy Shifts
The bank is restricting reward points for certain transaction categories. Going forward, purchases related to gift cards, tolls, bridge fees, and road fees will no longer earn reward points or cashback. Furthermore, these transactions will not count towards spending milestones that might be required to waive annual card fees.
These changes are part of a broader trend within the Indian banking sector, where lenders are increasingly refining their unsecured retail lending portfolios. As credit card competition intensifies, banks are focusing on balancing customer growth with profitability. By excluding low-margin or high-risk transaction types from reward programs and increasing fees on specific services, the bank is attempting to protect its profit margins in the credit card segment.
For investors and customers, the primary monitorables will be the impact of these changes on customer retention and overall credit card usage. While such fee hikes can support fee-based income, there is a risk that higher costs might influence user behavior, especially among price-sensitive customers. The market will track whether these measures successfully improve the profitability of the credit card portfolio without significantly affecting the bank's customer acquisition and card activation rates.