The cautious consumer is not going away

Australian consumers show no sign of changing their conservative stance on financial matters. Bank deposits remain the preferred destination for savings, and spending on debit cards continues to grow at the expense of credit.

According to the latest Westpac-Melbourne Institute Index of Consumer Sentiment, which was released yesterday, 39 per cent of respondents said they would put any investment money into a bank deposit.

The preference for bank deposits is up from 32.6 per cent in the June survey and is at its highest level since 1974.

The number who said they would invest in residential property fell from 25 per cent in June to 19.8 per cent in the latest survey.

The number of respondents who said they preferred shares as an investment was 5.5 per cent.

Twenty per cent said they would use any spare money to pay down debt - unchanged from the previous survey.

Meanwhile, consumers continue to increase their use of debit faster than their use of credit.

Reserve bank figures released yesterday show that consumers made purchases on debit cards worth an average of A$12.6 billion a month during the first seven months of this year.

That is 5.9 per cent higher than the average monthly spend last year, which was $11.9 billion a month, and 20 per cent higher than the average in 2010 ($10.5 billion a month).

Compared with this, average monthly purchases on credit cards for the first seven months of this year were up on last year's monthly average by three per cent and up on the 2010 average by 7.9 per cent.
 
Credit card balances accruing interest, at $36.7 billion in July, have remained largely the same over the past 12 months.