Australian’s Increasingly Switching From Credit Cards Into Debit Cards

Post by NeilMc on March 8, 2010 · Under Debit Cards, banking, credit cards · Comment 

Australian consumers are increasingly transitioning away from credit cards and into debit cards instead, as concerns over personal finance become more acute, and major lenders engage in a big marketing push.

Major lenders have pushed debit cards that are linked to major card providers such as Visa and MasterCard according to banking research adviser Robert Morgan of East & Partners.

“Now the banks have got scheme debit cards, so that means you have arguably a wider acceptance. We are seeing a continuing trend to where people (think that) in terms of a credit card, a debit card is straight out of your bank instead of piling on the credit.” Mr. Morgan said.

35.8 per cent of all merchant transaction in 2009 were paid using debit cards, up from 24.6 per cent in 2008 East & Partners says.

Credit cards were the second most popular payment method, followed by cash, cheques and direct credit.

The flexibility provided by debit cards alongside concerns over rising personal debt lead to their popularity.

Scheme debit cards are similar in nature to Electronic Fund Transfer Point of Sale (EFTPOS) cards, and allow consumers the ability to pay online or using a telephone in much the same way as a credit card.

“People are changing perhaps their view of debit cards as well. Plastic is not confined to credit cards. With the global financial crisis, of course, people have tightened their belts and looked at credit spending habits.” Mr. Morgan said.

Harry Senlitonga of research firm Canstar Cannex says that debit cards offered consumers a way to control their personal finances.

“The good thing about debit cards is that they are using their money and it excludes the trap of getting into debt,” Mr. Senlitonga said.

Mr. Senlitonga added that the major Australian lenders have become increasingly aggressive in their debit card offerings, which was another factor contributing to their growth.

“We have seen now the four major banks have debit cards as part of their transaction offering. It was not introduced until around three years ago. That is a reason why credit card growth has been less than debit card, and people are spending more carefully.” he said.

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