Aussies are frequently choosing debit cards over credit cards when it comes to managing their spending, with young cardholders in particular preferring to steer clear of credit, according to the RBA’s Consumer Payments Survey.
The report, which also revealed that plastic has taken over cash as Australia’s preferred payment method, found that 30% of payments were made on debit cards in 2016, while just 22% of purchases were charged to credit cards.
And it’s primarily young Aussies who are behind the growth of debit cards, with survey respondents under the age of 30 reporting they make 4 debit card payments for every 1 credit card transaction, up from a 2:1 ratio in 2007. Shoppers 30 and over, on the other hand, used debit and credit cards a similar amount.
The increase in debit card use, according to the report, may be because more and more young spenders are using debit cards instead of cash, which declined from 70% of transactions a decade ago, to just 37% in 2016. Older spenders, on the other hand, are swapping cash for both debit and credit cards.
So why do young people prefer to use a debit card over a credit card? According to the report, one significant factor is that around 70% of younger survey respondents didn’t actually have a credit card.
But even those young Aussies who were credit cardholders were more likely to use a debit card than their older counterparts. This may be because younger Aussies “tended to perceive debit cards as more convenient for making payments and managing finances.”
Older Aussies were much more likely to use a credit card for convenient spending, while the major reason young spenders had for holding a credit card was to “borrow money/smooth spending.”
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