- April 20, 2010
- Posted by: admin
- Category: Finance News
Recent data from the Reserve Bank of Australia (RBA) showed the total value of transactions on credit and charge cards rose 6.05 per cent in February.
The average credit card account balance increased by 1.9 per cent to $3,250 in February and it was 3.29 per cent higher than a year earlier.
Commsec chief economist Craig James said the confidence of consumers has risen as the expansion in Australia’s economy continued apace but the growth in credit cards remained subdued.
Australians remain confident about the economic outlook despite two interest rate rises by the RBA in 2010, the Westpac-Melbourne Institute consumer sentiment survey for April said this week.
“When you have a look at the average credit card balance, it does seem as though there is a bit more confidence creeping in,” Mr James said.
“The balances are starting to rise on a smooth basis, on a 12-month average, but consumers are still very cautious.”
However, the spending growth of using debit cards was exceeding that of credit cards, Mr James said.
“People are still more inclined to use their own money to make purchases rather than put it on credit,” he said.
Datamonitor senior analyst Harry Senlitonga said usage of debit scheme cards has risen over 30 per cent in the past 12 months, compared to 6.69 per cent for credit cards.
“Debit scheme cards give consumers the best of both worlds; accessibility of a credit card and they allow the consumer to use their own money, Mr Senlitonga said.
“When it comes to choosing which cards to use, it is clear that Australians choose to use their own money (debit scheme card or EFTPOS) rather than borrowing (credit card).”
Mr James said consumer behaviour in paying for goods and services has had a dramatic change since the onset of the the global financial crisis in late 2008.
“When you go back a couple of years ago, the regular stories were we were living beyond our means,” he said.
“We were racking it all on credit.”