Despite the gripes over horrendously high credit card interest rates, debt-laden households still thrashed the plastic during the Christmas spend-up.

Consumers spent $21 billion with their credit and charge cards in December, a whopping 19.4 per cent rise on the previous month.

Commonwealth Securities economist Savanth Sebastian said there was little doubt that this was the impact of the federal government’s $10.4 billion stimulus package that paid out $8.7 billion in cash handouts to pensioners and low-income families in mid-December.

“However, the uncertain environment and concerns over job security has resulted in a more cautious consumer,” he said.

New data released by the Reserve Bank of Australia (RBA) on Thursday also suggests the cash handouts were used to pay down credit card debt - even if in some cases it didn’t stay in the account too long.

A total $21.5 billion was repaid on credit card accounts in December, an equally stunning 22.2 per cent jump on November.

“Paying down unnecessary debt to maximise the household budget has been high on the agenda with debt repayments surging by the largest increase since May 2006,” Mr Sebastian said.

The net result was that total outstanding balances rose by a slim 0.1 per cent over the month, albeit to a record $45.3 billion.

How the December cash handout was spent and what impact the latest $42 billion stimulus package will have on a rapidly slowing economy will be key questions thrown at RBA governor Glenn Stevens on Friday when he faces the parliamentary economics committee in Canberra.

Other data released on Thursday showed small business gained little joy from last year’s stimulus measures and were being hit hard by a slowdown in consumer spending.

The National Australia Bank’s quarterly small and medium-sized business survey found trading conditions in the final three months of 2008 were the most pessimistic since the series began in June 2006.

“Business directly affected by the downturn in consumer spending are finding it hard going,” NAB general manager of business banking Geoff Greer said in a statement.

“Property services, residential construction and motor vehicle retail industries have been hit hard by the slump in spending.”

There was also little good news for car manufacturers with new official data showing vehicle sales fell by a seasonally adjusted 1.7 per cent in January to stand 16.9 per cent lower than a year earlier.

Tasmania was the only state to show growth in sales during the month.

The data comes as jobs at car maker Holden are under threat after its parent company General Motors said it will be shedding 47,000 jobs worldwide to gain bailout funds from the US government.

Federal Opposition Leader Malcolm Turnbull said any job losses at Holden would in part be a consequence of economic mistakes by the Rudd government.

Mr Turnbull told reporters in Melbourne the government’s unlimited guarantee on bank deposits was particularly damaging.

“The flow of the money to the finance companies that finance the motor industry dried up, and right around the country car dealers are struggling to find the finance to fund their floor plans and the finance to enable people to buy the cars that they’re offering for sale,” he said.

AAP