Rate rises put off credit card users

The Reserve Bank of Australia’s (RBA) consistent interest rate hikes in recent months have had an adverse impact on credit card spending, it has been observed.

Stephen Roberts, chief economist at Nomura Australia, told Trading Room that the RBA’s actions had caused a severe drop in consumer confidence.

"You’d think that it would be enough for the RBA, even with the level of concern about inflation, to at least have a pause for a few months before it starts to tighten more," he said.

"It depends how much they want to break things. They’ve already broken retail sales."

Mr Roberts was commenting on recent Australian Bureau of Statistics figures which showed that retail sales rose by just 0.1 per cent in the first quarter of this year. This contributed to a 12-month growth figure to March of only 1.2 per cent – the weakest annual figure since July 2001.

Tighter lending conditions and rising rates many encourage more Aussies to compare credit cards as they search for more affordable options. This week, the RBA increased its official cash rate for the third time in a row to 4.5 per cent.

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