Credit cards take over

Jeff Whalley
Herald Sun
March 13, 2012

Credit card use is soaring, latest figures reveal.

AUSTRALIANS are abandoning cash for small purchases at a “staggering” rate as card providers win their relentless battle for pride of place in consumers’ wallets.

Official figures reveal transactions on debit and credit cards are soaring despite the slowdown in retail spending.

While the average credit card balance is growing at an anaemic pace – along with the average card limit – transaction numbers are rising at a double-digit rate.

Reserve Bank figures released yesterday show the average transaction value for debit and credit cards fell to a record low in January, below $90.

But it came as the number of purchases on debit cards soared to 207 million – up 12.5 per cent on the same month a year ago.
The number of purchases on credit cards climbed at a similar rate, to 142 million.

CommSec economist Craig James said technology was driving the death of cash.

“Cash has been out of favour for some time as have credit cards, but the extent of the slide over the past year is staggering,” he said.

“Payments via mobile phones, internet banking, internet buying and ‘tap-and-go’ cards are just some of the trends hastening the demise of cash.”

The central bank’s figures also confirmed that Australians remained debt averse, Mr James said.

The number of debit card accounts was growing at four times the rate of credit card accounts, he said.

“The average Aussie is still probably working on the assumption that we are continuing to load up on debt, but nothing could be further from the truth.

“The new age of consumer conservatism shows no sign of ending with debt shunned and purchases much more likely to be put on debit cards – not credit cards or even cash.”

The Reserve Bank figures reveal that the number of ATM withdrawals was the smallest for any January in the past six years.

Providing further evidence that consumers are increasingly averse to debt, the average credit card balance fell $87.30 to $3262.50 between December and January.

While card balances traditionally fall in the first month of the year as consumers pay off Christmas purchases, the average credit card balance climbed just 0.7 per cent in January, compared with the same month a year earlier.

It was the slowest growth rate in more than two years.

The average credit card limit grew by just 0.7 per cent over the year, the slowest growth since records started being kept in 1995.