Credit Card marketing in Australia is currently on fire as more consumers try to avoid personal debt. Many people prefer to use debit cards because they can only be used if the money is in the bank beforehand.
Advertisements are coming at us from every angle (even on bloody Pay-TV). Go figure.
We receive brochures in the mail (stuff we don’t ask for,) and see ads in just about every TV series break. How in the world can one keep track of the market with all the information?
Credit card offers are being served to consumers on the golden platter with many great deals and low introductory periods: This is the right time to snap up a bargain if you are controlled in your spending.
Debit cards have seen an incredible boost in the market while overall credit card usage fell during the GFC.
Director of MWE Consulting Mike Ebstein said: “Debit cards have been positively affected by the recession because in times of uncertainty, people want control, they want to get rid of doubt.”
“To some extent there is uncertainty associated with credit cards because you’re only limited by the size of your credit limit.”
According to Mr Ebstein the shift had also occurred because banks and card providers Visa and MasterCard have aggressively marketed debit cards as a better alternative to EFTPOS payments in the last 24 months.
“As far as the major banks were concerned it was a new product development,” he said.
“But you would say that some of the spend that’s going into scheme debit almost certainly would have otherwise gone to scheme credit.”
RBA says Debit Schemes are soaring:
Since July 08 the amount of debit card purchases have soared by 32.5 per cent with an increased value of 31.3 per cent opposed to 3 per cent and 1.7 per cent respectively with credit cards.
Commonwealth Bank of Australia (CBA) is one of the many financial institutions who is currently ramping up their marketing tactics to entice more credit card consumers into their fold. The bank is planning to launch several new credit card products next month, including low fee and low fee Gold credit cards. Both of the card will be waived for existing customers who spend annual amounts of $1000 and $10,000, respectively.
Choice spokesman Christopher Zinn said there had been a bit of a “free-for-all” in the credit card market recently.
Mr. Zinn said: “It’s one of the more expensive ways to actually borrow money and one of the more profitable area of the bank’s operations.”
“That’s why there’s a lot of banks seeking to get people to change cards, to move to new cards, sending two cards instead of one, sending out inducements to increase your credit card limit.”
Australian credit card market strong in Australia:
Despite the strength of debit card schemes at present, our credit card market is still one of the strongest in the world and growing.
A report by MWE Consulting found that compared to the United Kingdom, Ireland and New Zealand, Australia was the only country where credit card spending is still growing, albeit at a much slower rate than before.
Mr Ebstein said: “Instead of growing at 20 per cent as it was five years ago, today (credit card spending is) growing at one to two per cent, so the dynamics of the market are giving very little scope for growth to the issuers.”
“They have to be innovative, they have to be active marketers to try and generate new business and I think that’s why we’re seeing activity in the credit card market because issuers can’t rely on the market to deliver growth – the market itself is stagnant.”
Source: Brisbane Times