Consumer Confidence Levels are Up, Credit Card Users Keeping An Eye On Their Transactions

Recent data from the central bank, RBA (Reserve Bank of Australia), seems to indicate that consumers are starting to shake off the effects of the recession.

Australians have been hit by the global recession just like everyone else, a fact reflected in the slowdown of the economic growth rate. As the economy has started to pick up in pace, consumer confidence levels have grown in lockstep.

One of the indicators used to measure consumer confidence levels is the average household spending on non-discretionary items, i.e., shopping for other than groceries and essential purchases. Consumer spending figures are available after long delays and surveys, so an often used advance indicator is credit card spending behavior. According to recent RBA figures the total value of credit card transactions increased by more than 6% in February this year. Also relevant is the increase in average credit card balances for the same period, it is now close to $3,250 per cardholder, a 3.29% increase from figures last year.

The numbers do seem to indicate that consumer spending is on the rise, but the credit card spending behavior do not tell the whole story. The Australian economy had started to post signs of recovery early on, and now it is quite clear that economic growth is continuing unabated. Even the recent interest rate hikes were pretty much shrugged off. All these factors would have suggested that the consumer confidence level had been restored, and average spending figures would be higher.

Well, in fact they are much higher. The credit card figures show a small part of the growth in consumer spending. It looks like more and more Australians are using their own money for spending rather than resorting to credit card debt. The use of debit cards over the last year has grown by 30%, almost dwarfing the 6% growth in credit cards. The situation was completely reversed just a couple of years ago.

We can conclude that the global financial crisis has induced the average consumer to alter their credit card spending behavior. Rather than borrowing from the bank through a credit card, they would rather spend their own money for household spending. Debit cards offer a perfect alternative, they have similar acceptance levels and carry no interest charges. As the consumer confidence level increases we can expect to see higher use of debit cards.

Comparison of our Top Credit Card Offers

		Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual Fee	Cash Advance Rate (p.a.)
Bankwest Breeze MasterCard	A low interest rate on everyday purchases with a low balance transfer offer	0% for 6 months (reverts to 10.99% )	4.99% for 9 months	$49	21.99%
Citibank Clear Platinum Card	A low interest rate offer on balance transfers and purchases	11.99%	0% for 12 months with 3% handling fee	$99	21.74%
St.George Vertigo	An introductory offer on balance transfer and a low annual fee	13.24%	0.99% for 6 months	$55	21.49%
Virgin Flyer Credit Card	Earn 1 velocity point per $1 spent, plus an introductory offer on balance transfers	20.99%	1.9% for 12 months	$50 (for first year thereafter $99)	20.99%
Westpac 55 Day Credit Card	No annul fee for the first year with a low rate on balance transfers and purchases	0% for 5 months (reverts to 19.59% )	3.99% for 6 months	$0 annual fee for the first year ($30 thereafter)	21.49%