Australians with credit cards may have learnt some hard lessons about debt and are getting on top of their credit card repayments.
The latest data from the Reserve Bank of Australia shows that borrowers with credit card debt repaid $21.3 billion off their outstanding credit card debts in August 2010. It's almost one billion dollars more than July's repayments and the fourth highest monthly result ever.
Usually the biggest repayment months have been in the lead up to Christmas - December and November - and this August data surprised many.
It seems consumers are taking credit card debt more seriously now. They got a wake up call in 2008 and 2009. Big competition in cheap balance transfer credit cards market might helped as well.
The August data from the RBA reveals some really interesting shifts in behaviour over the last six months:
Growth in repayments on credit card debts is now matching or exceeding growth in card spending, which has slowed significantly. And most importantly Australian credit card debt is coming down. Our total and average credit card balances have been climbing since mid last year but fell sharply by more than one per cent from July to August.
Interestingly, it is not just high interest credit card debt that consumers are shying away from. Shoppers are rejecting those "interest-free" deals from retailers as well. Australians are not buying goods on store credit schemes despite some very good offers around at the moment.
"Shoppers can get two three four years interest free on large retail items now but they are still shying away from taking up those deals."
All this is happening despite the banks now loosening up their credit criteria and rules and wanting Australians to spend more on their credit cards. The average card limit went up again in August, but despite that temptation, total outstanding balance came down.
Let's hope Australians won't stop and will keep their credit card repayments in tact.