News : Cheap Credit Cards

Card spending slowed in April: RBA

Date : June 19, 2008

Credit card spending grew at its slowest pace in more than a decade in April, latest statistics show, as consumers grappled with high interest rates and the soaring cost of fuel and food.

Australians spent $17.66 billion on their credit and charge cards in April, up three per cent from $17.14 billion in March, figures from the Reserve Bank of Australia (RBA) show.

Total credit and charge card balances outstanding increased by 1.4 per cent in April to $43.64 billion, from $43.04 billion.

The average credit card balance was $3085 in April, up from $3056 the previous month.

CommSec equities economist Savanth Sebastian said the average credit card balance rose by 5.2 per cent in the past year, its slowest pace since records began 13 years ago.

With official interest rates at a 12-year high, Mr Sebastian said consumers were "taking heed of advice to keep debt in check".

"Consumers are clearly responding to the higher interest rates and attempting to budget more efficiently," Mr Sebastian said.

"Higher interest rates and expectations of further hikes have increased consumer awareness of the need to spend within their means."

Cash advances on credit and charge cards were less popular in April - the number of transactions fell 1.3 per cent in the month and the value of those transactions declined by 2.1 per cent.

The number of cash advances declined 6.5 per cent over the past year.

Cash advances have not recorded a single month of growth, in annual terms, over the past 12 months, Mr Sebastian said.

"The focus on higher rates has seen a concerted effort by consumers to keep debt levels to a minimum," he said.

The number of credit and charge accounts increased by 0.4 per cent to 14.14 million in April from 14.08 million in March.

Meanwhile, the value of EFTPOS purchases fell 0.5 per cent in April.

But the value of EFTPOS purchases was up 24.5 per cent over the past 12 months, compared with an average of 10.7 per cent over the preceding five years.

Source : http://news.theage.com.au/