The latest RBA data has shown that Australians are shifting to debit cards from credit cards when making purchases and that the value of purchases and cash advances on credit and charge cards fell 1.5 per cent to $18.8 billion in August from July.
Savanth Sebastian economist from Commsec felt that while consumers were shifting to debit cards and cash he foreshadowed that there would be an overall rise in credit card growth in the months ahead. RBA data has also shown that purchases on debit cards rose by 13.8 per cent in August, and that the average credit balance was $3131 in the month up 0.1 per cent from 12 months ago.
Mr Sebastian also stated that the annual rate of credit card balance growth was positive for the first time in five months and would slowly improve following a rebound in consumer confidence. Figures released by the Westpac Melbourne institute index of consumer sentiment released last week rose by 1.7 per cent in October to its highest level since June 2007.
Mr. Sebastian also added that credit card growth was not going to explode and that it would remain around these levels until 2010. Consumers will depend on debit cards, eftpos, and cash for now but over the next year there will be a marginal shift to credit cards.
The value of cash advances on credit and charge cards decreased by 2.6 per cent in August, and were down 9.2 per cent on 12 months before. Repayments on credit cards fell by 4.5 per cent in August, yet rose by 4.2 per cent over the year.