Credit card spending falls in September

By Mozo ·

Aussies reined in their credit card spending in September, according to new figures released by the Reserve Bank of Australia (RBA).

Plastic purchases were calculated at $19.5 billion during the month, which was down from $21.7 billion in August, Business Day reports.

This was the lowest rate of spending recorded since April 2012 and is a clear indication that people are wary about taking on too much credit card debt.

Credit card balances fell from $49.2 billion to $49.1 billion over the four-week period too.

Moody's Economy.com's Katrina Ell told the news provider that recent interest rate cuts have not been enough to encourage Aussies to start splashing the cash more freely.

The RBA has hacked away at the national cash rate since the tail end of last year and it now stands at a three-year low of 3.25 per cent.

However, Ms Ell is hopeful the large-scale interest rate reductions will eventually persuade people to loosen their grip on their wallets and purses.

"We are cautiously optimistic that as the stimulus from 150 basis points worth of cuts filter through the economy, consumers will spend more freely in coming months," she was quoted as saying.

There has been an apparent shift away from credit cards towards debit cards in recent months across Australia.

The latter are proving more favourable because they allow people to pay for goods quickly and conveniently, but will not allow them to rack up huge amounts of debt. This is very handy for someone who has a tight budget to stick to.

A study conducted by National Australia Bank in September highlighted a clear difference in the demand for plastic products between younger and older members of society.

While more mature Aussies were keen to take advantage of the rewards attached to credit cards, people from Generation Y preferred to make purchases with their debit cards.

This is no great surprise, as Aussies of a certain age will have more financial clout, allowing them to keep up with their monthly repayments.

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