Data Record New High In Credit Cards Use Since 2006 Despite Sluggish Labour Market

The demand for credit cards in Australia has recorded a new high, which is deemed as “the strongest activity in nearly a decade,” report says. Credit data provider Veda announced that credit card issuers recorded new figures — an upsurge by 13.5 percent of overall credit card demand from last year.

Such figure, according to Veda, was observed amidst a sluggish labour market. But the said increase was not because of another cut on interest rate, although the Reserve Bank of Australia, or RBA, hinted it may issue another reduction in the rate following a comment by RBA Governor Glenn Stevens that Sydney property prices have been given too much attention by the Australian government.

Veda’s release of new record as supplied by the providers was described to be a marketing drive that is effective, and it further said that the latest figure was driven by RBA’s slash in the interest rate in February this year. Angus Luffman, general manager of Veda, offered another reason for the new high record — credit card holders are using the plastic for another reason.

Luffman elaborated that while in the past, consumers use credit cards in applying for new loans, at the present however, they use it more to make payments. In particular, people use credit cards to repay “existing purchases.” The New Daily earlier reported that banks view credit card holders as favourite customers as they are among the contributors in pushing “CBA bottom line 12 percent higher.”

Personal loans plummeted by “5.2 percent in the year to March,” although there was a decline in a marginal improvement on the 5.9 percent in the 12 months to December. In addition, Veda’s overall quarterly consumer index increased by 3.9 percent from the previous year, implying an increase on its 0.8 percent growth as of December.

Luffman went further by saying there was an improvement in consumer confidence after the February rate cut and as a consequence, demand for credit cards soared. Too, mortgage applications went up by 5.5 percent in the previous 12 months and such figure contributed to the rate cut in February, said Luffman. The mortgage applications were not considered in Veda’s index.

For comments or feedback on the article, contact the writer at kizmet@ymail.com. You may also join or start a discussion below.