Credit card debt has recorded its slowest growth in more than a decade as higher interest rates force consumers to rein in spending, economists say.

Australia’s average credit card balance was $3,085 in February, according to figures from the Reserve Bank of Australia (RBA), up from $3,031 in January.

CommSec equities economist Savanth Sebastian said the average credit card balance had risen 4.2 per cent, in trend terms, over the past year, making it the slowest growth since records began almost 13 years ago.

“Consumers are clearly responding to higher interest rates and keeping their debt levels in order,” Mr Sebastian wrote today.

Australia’s central bank lifted the official cash rate 0.25 percentage points in February, but banks raised rates on their own lending products beyond the RBA move, citing higher borrowing costs on wholesale money markets.

The total balance of credit and charge card transactions climbed to $43.25 billion in February, from $42.34 billion in January.

Total repayments fell by 7.90 per cent to $16.77 billion in the month, from $18.21 billion the previous month.

Cash advances, which usually carry a higher interest rate than other credit transactions, declined in February, both in number and value.

Mr Sebastian expected this to continue as consumers “shunned” more expensive forms of debt.

“It’s likely that cash advances will continue to lose favour in coming months, as the impact of the March rate hike and the possibility of further rate hikes, increase consumer awareness,” Mr Sebastian said.

“The number of credit card cash advances in February was 1.2 per cent lower than a year ago and has consistently fallen in annual terms for ten months.”

The number of cash advances on credit and charge cards fell to 2.84 million, from 2.99 million, as the value of advances decreased to $1.04 billion, from $1.05 billion.

The number of purchases using credit cards fell 4.92 per cent to 109.43 million in February, from 115.09 million in January.

Mr Sebastian said household balance sheets were “in good shape”.

“Higher incomes are helping Aussie consumers in managing their debt load,” he said.

AAP