Credit & debit card lending

Record fall in credit card debt. The average credit card balance fell by 3.2 per cent in the year to April, the biggest drop in 19 years of records. Average use of credit and debit cards is at record highs.



What do the figures show?

Figures released this week from the Reserve Bank show that the average credit card balance fell by $39.00 (1.2 per cent) in April to $3,217.70. The average credit card balance is down by 3.2 per cent on a year ago – the biggest fall in 19 years of records.



Of credit cards attracting interest charges, the average outstanding balance rose by $61.00 in April to $2355.20 after falling by $60.10 in March. The average balance accruing interest is down by 4.7 per cent on a year ago after falling by a record 5.7 per cent in the year to March. 



The average credit card limit fell by $28.30 to $9,062.70 in April. The average credit card limit rose by just 1.0 per cent in the year to April – just above the slowest growth rate in 19 years.



The average number of transactions on credit cards in April was 10.7, up from 9.6 in March. In smoothed terms the average number of credit card transactions was 10.1 in April – a record high.

The average number of transactions on debit cards in April was 7.4, down from 7.5 in March. In smoothed terms the average number of credit card transactions was 7.4 in April – a record high. 



The number of credit card cash advances rose by 12.3 per cent in April, but the result is affected by the early timing of Easter (value rose by 9.0 per cent). In smoothed terms, credit card advances are down 3.8 per cent on a year ago and have consistently fallen in the past five years.



The number of purchases made with credit cards rose by 15.7 per cent over the year to April, but as noted above the result is affected by the early timing of Easter. Purchases made with debit cards were up 16.7 per cent on a year ago (value up 13.5 per cent).



The number of ATM withdrawals in April was down by 2.8 per cent on a year ago. In smoothed terms, ATM withdrawals were down by 6.0 per cent on a year ago – the biggest fall in over three years.


What is the importance of the economic data?

The Reserve Bank releases data on credit and debit card transactions each month. The credit card figures are useful in highlighting consumer borrowing and spending trends.


What does it all mean?

Consumers are using their plastic cards more often but still aren’t keen to take on more debt. So the average credit card balance continues to shrink. Overall consumers are getting smarter about making purchases – using cash less often to make purchases and paying with their own funds rather than going into debt.



Retailers must acknowledge that consumers are savvier about their shopping and must change with the times. The average Aussie shopper will shop around more often to get the best quality goods and the lowest price. More shoppers are using their cards online to make purchases. Retailers must change to reflect the way that consumers want to shop, especially those selling services, making sure they have mobile payment devices and secure online sites to attract and retain customers.



Pressure on retail margins will continue.