Australians Shift From Credit Cards Into Debit Cards

Post by Sharat on October 16, 2009 · Under Australian Economy, banking, credit cards, news · Comment 

Australians continue the trend of shifting away from using credit cards into debit cards whilst making new purchases. Over all credit card debt however is expected to increase as optimism over the economic recovery increases.

According to data released by the Reserve Bank of Australia, the value of purchases and cash advances made on charge and credit cards declined by 1.57 per cent in August from a month earlier.

Savanth Sebastian, an economist with Commsec noted however a continuing shift in credit card use into debit cards, which he believes foreshadows an eventual increase in credit card growth in the coming months.

“This August data does highlight consumers shunning any sort of debt and instead using cash and debit cards. It is a trend that will remain in place, but you will see credit card transactions at least rise. It seems the reliance on credit has really waned and the focus for consumers is trying to manage their household finances.” Mr. Sebastian said.

The RBA data shows that purchase made using debit cards increased by 13.8 per cent in August, with an average credit balance of $3,131, up marginally by 0.1 per cent from a year earlier.

The positive increase in credit card balances was the first such increase in five months, with Mr. Sebastian suggesting a gradual improvement following a rebound in consumer confidence.

“You are not going to see credit card growth explode. It is more likely to wallow around these levels until we move into 2010 and consumers can start looking to the future and start to forget about the global financial crisis. The reliance will be on debit cards, EFTPOS and cash but over the next year there will be a marginal shift to credit cards.” Mr. Sebastian said.

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