Australians are continuing to reduce their credit card debts

Photo: iStock

Australians remain reluctant to borrow too heavily on their credit cards, choosing instead to pay for their purchases using existing savings.

According to Commsec, citing data released by the Reserve Bank of Australia (RBA), the average credit card balance in Australia stood at $3,130 in June in seasonally adjusted terms, down 0.5% on a year earlier.

As seen in the chart below, that reduction has been part of an ongoing trend over the past five years, corresponding with a period of weaker-than-usual labour market conditions, soft wage growth and increased consumer pessimism.

Source: Commsec

Reflecting ongoing caution when it comes to credit card spending, the number of credit card accounts nationwide stood at 16.73 million in June, up just 0.5% on a year earlier.

That was the slowest annual growth rate since the data was first released 23 years ago.

However, while growth in credit card accounts slowed sharply, there was continued strong growth in debit card accounts which grew by 4.6% to 44.9 million over the same period.

Commsec said that the number of transactions for both credit and debit cards both rose from a year earlier, likely reflecting the increased use of tap-and-go payment technology.

An average of 13.1 transactions were made using each credit card account in June, up from 12.1 a year earlier. Debit card transactions per account rose by a similar margin, increasing to 10 from 9.1 in June 2016.

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