Australians avoid using credit cards

The Reserve Bank of Australia (RBA) figures show that Australians’ credit card balances are falling. It declined by an annual 1.2%. Also the central bank revealed that consumers collectively spent $17.376 billion on their credit cards in April, which is 7.5% less than it was spent in March. According to Commsec economist Savanth Sebastian, Australians use their credit cards less as a result of worries about economy’s current condition.

''Despite early signs that the global economy is stabilizing, consumers continue to remain cautious, shunning debt at every opportunity,'' Mr Sebastian said. As federal government forecast unemployment rate would rise from current 5.7% to 8.5% in late 2010. ''The expected rise in unemployment will ensure that consumers largely focus on necessities rather than splurge on luxuries,'' he said.

Interest rates charged on cash advances became higher. Consequently, consumers try to use that facility more rarely, as Mr Sebastian noted. Cash advances value dropped down to its bottom since October 2004. According to Mr Sebastian cash advances are falling by 17% per year.

Harry Senlitonga, a senior analyst with financial researcher Canstar Cannex, said that above-mentioned RBA figures indicate that Australians were switching from credit cards to debit cards to make their payments. ''The amount transacted on debit cards in the last 12 months is up 31.86 per cent,'' Mr Senlitonga said.