Are you using your credit card more often?
Statistics released from the Reserve Bank of Australia (RBA) advise that values on credit card usage rose by 12.2% during the last year, whilst balances owed only rose by 6.4%. This consumer behavior can be interpreted as credit card usage is more frequent, but repayments are at a much slower rate.
Latest figures
Charge or credit card usage reached $19.908 billion in March 2010 according to the RBA report, which is an increase of $2.167 billion from the previous year. The actual increase, if you include cash advances, was 11.6% or $2.174 billion from March 2009, giving a total of approximately $20.950 billion.
The average transaction in March was for $150.26, totalling 139.425 million for that month alone. There was a rise of 8.7% in credit card repayments from March 2009 to March 1010, which is higher than the previous five year average of 7.9%. In March 2010 the total outstanding charge and credit card balances reached $47.177 billion, a 6.4% or $2.819 billion increase from the previous year.
Average credit card balance decreased
A decrease of 0.2% to $3,243.92 in average charge or credit card balances was recorded in March compared to the February figure of $3,250.49. But overall the average credit card balance for Australia at 4.6% is still higher than it was in March 2009.
The reason given for slower balance repayments on the average charge or credit card to reduce the outstanding debt was the increase of 1.6% in charge and credit card usage up to March 2010. It is estimated that Australia now has more than 15.5 million charge and credit accounts, compared to 14.3 million the year before.
Cash withdrawals
Other conclusions drawn from the RBA report are that consumer behaviour has changed and people are more cautious about making withdrawals with their credit cards. Looking at the credit and charge transactions in total indicates the value of cash advances in March 2010 was only 0.7% higher at $1.042 billion, compared to the figure of $1.034 billion recorded the previous year.
This could be attributed to regulation changes in 2009, requiring that ATMs now display the charges incurred when making withdrawals of cash, thereby affecting consumer behavior. Or alternately people could be more aware of how much cash withdrawals are actually costing them.
The disadvantage of cash withdrawals is that they do not have any interest free days, consequently interest starts accruing straight away. In addition interest charged on cash withdrawals is higher than balance transfers or purchases.
