Are Aussies returning to old credit card spending habits?
The recent savings trend in Australia may be coming to and end with reports that many people are shifting their way to back their old credit card habits.
There has been much said of the remarkable post GFC trend of Australians becoming more responsible with their personal finances. Last year, Australian's held $57 billion in savings, up 10 percent from the previous year. On top of this banks were recording a large increase in the use of low interest rate credit cards by Aussies looking to pay off their outstanding debts faster. However, the trend could now be coming to an end.
However, the results of a new survey suggest the trend could now be coming to an end according to findings from Dun & Bradstreet's Consumer Credit Card Expectations Survey which measures consumer outlook for savings,credit usage, spending and debt performance for the June 2013 quarter.
As many as 41 percent of consumers with a credit card now intend to make a purchase that they would not usually be able to afford. The highest percentage recorded in over 3 years. And as for savings, just 26 percent of consumers are now likely to save, down 5 percent compared to the same time last year.
"The lift in the number of consumers planning to use their credit cards and the fall in the number adding to their savings is a sign of strength in consumer demand and optimism," says Stephen Koukouls, Economic Advisor to Dun & Bradstreet.
According to the Australian Bureau of Statistics, retail spending for February was already higher than expected at 1.3 percent.
The survey also showed that although Australians are planning to increase their spending , they do not expect to be negatively affected, with the number of people expecting difficulty in paying off their credit cards balances staying unchanged at 34 percent.
"With the RBA maintaining low interest rate levels, the unemployment rate relatively steady, house prices recovering, and a bullish share market, consumers are signalling that the positives outweigh the negatives and consequently are willing to spend more freely on credit," says Danielle Woods, Dun & Bradstreet's director of corporate affairs.Although the growing financial optimism was not equal in all states. Financial concern was at its highest amongst flood stricken Queenslanders (59 percent) and in the struggling economies of South Australia and the Northern Territory (58 percent.) Gaining the full benefit of the resource boom, concern was at its lowest amongst Western Australians (43 percent.)
Many, including businesses, will be welcoming the return of consumer confidence and spending. And one way for Aussies to avoid their debt spiralling out of control is use a low rate credit card and of course to plan their spending with a budget calculator. Compare low rate credit cards here.
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