Australians are cutting back on credit card use, as new figures from the Reserve Bank show the growth in the number of credit-card purchases has declined.
The new figures reveal that while the value of purchases made on credit cards has climbed from $16.6 billion in January to $17.1 billion in February, the total number of transactions has actually declined.
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In January the total number of credit card transactions totalled 115,723, while that number fell to just 111,240 in February. The figures also show that credit-card balances are growing at just 5% annually – the slowest rate since 1993.
And as credit-card use is on the decline, so is the speed at which debt is being repaid. In January about $18.1 billion was totalled in debt repayments, but that figure drops to $16.8 billion in February.
Westpac senior economist Bill Evans says that the decrease in debt repayments is due to the spill-over nature of the Government’s December stimulus package.
“This is an effect from the stimulus package. I think January was a spillover effect from the hand-outs from the Government, so people may have taken some time to get around to paying down debt, whereas February is a bit further out,” he says.
“So we expect to see some similar activity in the June quarter due to the new stimulus package being handed out.”
Evans also says this also explains the dip in the amount of debt repayments recorded in February, and says that the next stimulus will see debt repayments increase over the next few months.
“Households are much more mindful of their financial position and are seeking to use credit cards less and pay down their balances – that was a big factor in December and should continue.”
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