Cash Smashed, Cheques Checked In Card Frenzy
Sydney Morning Herald
Tuesday March 20, 2001
A red-blooded sales season boosted credit card spending and debt levels in January.
Card use was unusually strong for the month, even taking account of the traditional sales period, according to a report by credit card consultancy group, CVC Global Consulting. Spending was up more than 45 per cent on the previous year.
Normally credit card use falls by more than 20 per cent in January, compared with December, but this year the drop was just 4.8 per cent.
Mr Mike Ebstein, general manager of CVC, said credit card spending had maintained an annual growth rate of about 30 per cent, despite the economy recording its first quarter of negative economic growth for a decade in the three months to December.
``As far as credit cards are concerned there has not been any downturn of significance," he said. ``It was certainly a more robust performance in January than expected. I was surprised because December had been pretty poor."
According to the Reserve Bank a record $17.58 billion was owed on bank-issued cards at the end of January, up from $13.9 billion a year before. The average credit card account balance in January was $1,854, up 17 per cent in a year, while the average credit limit was $5,282.
Mr Ebstein said that consumers may have delayed spending to take advantage of the January bargains. ``It might mean more people were being a bit smarter this year and put off some Christmas spending until the sales."
While the January figures were boosted by vigorous sales offered by retailers, the rise of credit card spending far outstripped the 7.2 per cent rise in retail spending in the year to January. This highlights a sharp shift in the way Australians shop.
The convenience of credit cards and electronic debits is eroding traditional payment methods such as cash and cheques.
Credit card reward programs, especially those offering frequent flyer points, are a significant factor in this, and, after a slow start, online shopping is also boosting card spending.
ANZ buoyed by its popular Qantas-Telstra Visa is estimated to have the largest share of total credit card spending with 27 per cent, followed by Commonwealth, 26 per cent, Westpac, 24 per cent, and National Australia Bank, 23 per cent.
In other banking developments, Westpac has overtaken Commonwealth in online customer numbers, according to InfoChoice.com.au. Westpac had 647,168 online customers at the end of February, ahead of Commonwealth with 645,847, ANZ with 554,907 and NAB with 416,315. St George Bank has 242,000, the most registrations for any regional bank.
There are now more than 2.5 million online customers registered with Australian banks.
Also, ANZ joined other lenders in dropping its fixed home loan mortgage rates yesterday. Its one-year fixed rate has been reduced to 6.4 per ent from 6.7 per cent.
© 2001 Sydney Morning Herald
