How asking for debit could control the economy

The government's efforts to control the growing rate of inflation may be put in jeopardy due to Australia's love of the credit card.

Spending on credit cards has reached record levels throughout the nation, with the amount owed by Australians through credit cards up 13.2 per cent on a year ago to a total of $31 billion.

Figures from the Reserve Bank suggest that total could hit $41 billion by the time winter comes around. Rising debt will, according to economists, increase inflation.

As a result, by switching from a high interest credit card account to a debit card, bank balances and the economy could become more controlled.

Consumer Action Law Centre spokesman Gerard Brody told the Herald Sun that by choosing to put expenditure on credit, rather than debit, consumers are adding to their existing debt problems.

"When people apply for a new card there are certain procedures that are gone through, such as checks on their income and debts.

"Often when it comes to increasing limits, people aren't subject to the same rigour in credit assessment.''

However, debit cards are becoming more popular with Australians, as more plan out their financial future. With the option of fee-free EFTPOS transactions, cashback and a stricter overdraft policy, the reasons to choose credit cards are plentiful.

With debit cards proving popular around the world - especially in the UK - it is only time before Australians say "debit" instead of "credit" at the mall.

All the best credit cards reviewed, rated and compared.

Latest Money News from Money-Au.com.au