Spending on credit cards increased in 2023, as savings ran down and the cost of living rose, and while consumers made it a priority to keep their revolving credit balances in check, stress levels increased.
The latest Reserve Bank payments data show that the value of purchases on personal credit and charge cards rose 4.8 per cent from A$25 billion in December 2022 to $26.2 billion in December last year.
Over the same period the value of purchases on commercial credit and charge cards rose 11.1 per cent to $8.1 billion.
However, balances accruing interest on all credit and charge cards fell by 0.2 per cent to $18.4 billion over the course of 2023.
Equifax reported that consumer credit applications rose for credit cards in the December quarter but fell for other types of consumer credit.
Applications for credit cards rose 1.2 per cent during the quarter, while applications for BNPL accounts fell 18.7 per cent and applications for personal loans were down 0.7 per cent.
Overall demand for unsecured credit fell 5 per cent, compared with the previous corresponding period.
Equifax general manager for advisory and solutions, Kevin James, said: “Throughout 2023, many consumers adjusted their spending habits to cope with the higher cost of living and rising interest rates.”
But Equifax also reported that there are signs of stress among credit card users. It estimated that credit card accounts in arrears, with accounts 90 or more days past due, were up 15 per cent in the December quarter compared with the December quarter 2022.
APRA’s most recent figures show that ADIs’ personal loan balances fell by 3.3 per cent in 2023. Some lender’s personal loan balances fell by more than 10 per cent over the year, including Westpac, Bendigo and Adelaide Bank, Bank of Queensland, Macquarie Bank and AMP Bank.