Demand for credit cards rose 13.5% in the March quarter to its strongest level since 2006, according to the Veda Quarterly Consumer Credit Demand Index.
Angus Luffman, Veda’s general manager of consumer risk, says the high demand is partly due to strong marketing activity by the major card issuers.
This is driving churn as consumers swap out cards for those with better interest rates or longer interest free periods or lower annual fees.
The latest data from the RBA shows the number of purchases per credit card account grew by 7% in the December quarter.
However, the average spend for each transaction fell by 2.9% and credit card balances grew at a modest annual rate of 1.6%.
“This indicates an emerging trend in the changing nature of credit card use,” says Veda’s Luffman. “Credit cards are increasingly being used as payment tools, with people making repayments on existing purchases instead of using them for new borrowing.”
Veda says overall consumer credit demand grew 3.9% in the March quarter.