Debit maintains its momentum
Consumers put a little more on their credit cards in June but the long term trend continues to be for shoppers to cut back on their use of credit. The latest credit card data from the Reserve Bank, published yesterday, shows that the average card balance rose from $3,094 in May to $3,127 in June but that June figure is down 0.2 per cent on a year ago.
Total spending on cards for the year to June was $221.2 billion. The growth rate was 3.1 per cent - a record low. The value of purchases in June was $18.4 billion.
The big news is the growth in debit, particularly scheme debit. The value of purchases made on debit cards in June was 40 per cent higher than in the same period last year.
Debit now makes up 35.8 per cent of card payments. According to MWE Consulting, debit accounts are increasing at more than twice the rate of credit and charge accounts.
MWE said in a report yesterday: "The impetus behind the growth in debit owes a significant amount to the performance of the scheme debit component. Scheme debit has increased from a 21.3 per cent share of the value of debit purchases in March 2008, when data commenced, to 26.7 in June this year. Share rose 24 per cent over the past12 months and the trend shows no signs of abating."
As to the declining use of credit, banks reporting their financial results during the past couple of weeks have noted that card payment arrears are down, which they attribute to consumers using their stimulus package handouts to get their affairs in order.
Bankers expect that consumers will continue to be cautious about taking on new debt. And credit card figures in financial reports show that lenders are equally cautious about writing new credit card business.
Balances across all cards stood at $44.8 billion at the end of June. Balances accruing interest, worth $31.7 billion, fell throughout the June quarter. The average balance accruing interest, $2,120 in June, fell by three per cent over 12 months.