The average amount owing on credit cards fell hard over the last year, from A$3300 to $2200 per household, ABS analysis of household income, wealth and housing costs to September 2020 shows.
Unsurprisingly, demand for other consumer credit picked up over the opening phase of the COVID pandemic.
The amount owing on “other loans” lifted to $19,600 per household, from $17,500.
Buy now, pay later, presumably, dominates the shift in the mix of credit demand from the household and self-employed sector; overall the rise was $1000 more per household.
One driver of the pay down in credit cards debts was the COVID-19 early release of superannuation scheme. This allowed up to $10,000 to be accessed before retirement for people suffering financial hardship, and for the well-organised could be accessed twice - enabling up to $20,000 of superannuation to be withdrawn.
“For people who accessed the scheme twice, the average total amount withdrawn was $17,441.
“The average single withdrawal was $7,728 for the first opportunity, and $7,536 for the second,” Dean Adams, ABS Director of Household Economic Resource Surveys said yesterday.
Around 15 per cent used the super cash raid to pay off credit card or personal debts, while around 13 per cent added it to their savings.
Then 29 per cent mainly used it to pay their mortgage or rent, while 27 per cent used it for household bills.
The proportion of households in the lowest private income quintile that reported saving regularly increased from 23 per cent to 30 per cent, thanks to the temporary boost in assistance.
In the September 2020 quarter, 32 per cent of all households experienced at least one indicator of financial stress, ancient history maybe to many now given housing prices off for a run and consumer and business confidence is on the up and up.
But that confidence is built on feeble recent foundations.
With super money sloshing and, at the time, income subsidies flowing, fewer households in the lowest private income quintile reported at least one indicator of financial stress, when compared to September 2019 – falling from 50 per cent to 43 per cent, growing the target market for the BNPL brigade.
Another cohort juggling choices on debt and spending looks to have been the self-employed and owner/operators of small enterprises.
Income earned from unincorporated businesses took a tumble, with many also locked out of the Jobkeeper scheme.
The weekly mean income of the self employed dropped from $2453 in September 2019 to $2211 a year later, a fall of 10 per cent.
Unincorporated business were supported with $172 per week, on average, in the form of government pensions or allowances, up from a mere $40 a week pre-pandemic.