Credit card spend trending up after July slump, finds Citi

While credit card spend dropped 14% in July, things are looking up as August saw a 4% recovery on the previous month.

This is according to Citi Australia’s August 2021 Credit Card Index, which found that Australian consumer confidence has recovered during the 2021 lockdowns than it did in 2020.

Last month, credit card spending saw a 2% growth from August last year, after a 5% drop in July year-on-year.

On top of that, more Aussies are signing up for credit cards. When compared week-on-week, Citi’s numbers showed a 27% increase in the number of cards acquired in the final week of August.

“In July, we watched history repeat itself, with spending volumes dropping across the country as citizens tightened their belts amidst the latest outbreak,” said Choong Yu Lum, head of cards and loans at Citi Australia.

“Despite lockdowns lingering throughout the two-month July to August period, we have seen spend recover in August. This could indicate that consumer confidence is not as sharply dented as in 2020, where we saw several consecutive months of muted spend.

“In line with a trend we saw last year, less Australians apply for a credit card during lockdowns. However, if we look at the week ending 3 September, our total acquisition volume is starting to rebound, up 27% on the previous week,” Lum said.

So, how are Aussie credit card users spending now?

Compared to last month, supermarkets and household goods retailing took up a larger share of credit card spend.

“Consumers are spending more in categories like retail goods or computer/technology goods, presumably to purchase items for home entertainment or remote work,” Lum said.

What’s next for Aussie credit card users?

Although there has been a lockdown downturn in credit card spend, Citi data shows that we are at the start of a recovery. As Australia approaches its vaccination milestones and COVID restrictions ease nationwide, this pattern is likely to continue as life slowly returns to normal.

“Already in the first week of September, we have seen card spend increase by 8.2% against the prior week. Next month, as we hopefully gain more clarity on the path to normal life, we anticipate that spend will only increase.

“October school holidays typically cause a spike in spending on recreation activities, and it will be interesting to watch which spend categories spike as families seek recreation that fits within COVID-safe guidelines,” Lum concluded.

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