Credit cards use declines as consumers opt for cash payments

24 August 2009

The latest Australian banks statistics, both from the Reserve Bank of Australia and major banking institutions, have shown that Australians are using their credit cards less frequently than six months ago. As banks are releasing their financial results for the six month leading to 30th June 2009, trends are emerging that show that Australian credit cards users are paying off their credit card debt far quicker with less people with card payment arrears.

These trends have been supported with the latest figures from the Reserve Bank of Australia which showed that during the month of June 2009 an adult Australian made two credit card purchases per week on average. These RBA figures further showed declines in the amount that people owe, the actual amount outstanding on credit cards falling from 72 per cent of the total amount outstanding in December to 70 per cent in June. This can be somewhat attributed to the decline in use for cash advances with the number of these kinds of transactions falling 9 per cent.

In related figures, the use of debit cards rose 17 per cent over 2009.

Banks financial results are citing the stimulus package payments and a shift in spending habits as the main cause behind the decline in credit cards use and consumers hesitant about racking up credit card debt due to financial insecurity.

Overall banks figures showed:

Credit cards balances were at $44.8 billion at the end of June
Balances of 31.7 billion that were building interest fell in June quarter
Average credit cards balance of $2,120 declined by 3 per cent in twelve months to June 30th

Of course, consumers are not the only ones who are nervous about credit cards and the potential to rack up debt with lenders also indicating their reservations about writing new credit card business.

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