Credit card spending 'cools down'

Plastic credit cards in Australia have no danger of melting through over use as consumers begin to tighten their belts, new figures have shown.

Data from the Reserve Bank of Australia (RBA) has revealed that Australians are calming down their spending as a result of the credit crunch.

The Herald Sun reported that credit card debt levels are growing at the slowest rate for 14 years and Australians upped their credit card repayments by 7.1 per cent in July, from $18.15 billion to $19.442 billion.

This is another indication that consumers are entering the new era of financial conservatism that RBA governor Glenn Stevens talked about this week.

Mr Stevens stated that there is a "good chance that households will for some time seek to contain and consolidate their debt, grow their consumption spending at a pace closer to income".

Commsec chief equities economist Craig James told the Herald Sun that interest rates, high petrol prices and soaring food costs have made Australians keep an eye on their budgets and their spending.

Mr James said that people are still using their cards but are keeping their balances under control.

The total value of credit and charge card transactions increased by 3.5 per cent in July but in the year to July, average credit card balances were down by $10 to $3,138.

In total Australians owe $44.446 billion on their credit and charge cards, which is down from $44.460 billion in June.

See the latest on the new Woolworths credit card

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