Australians appear to have taken a sensible approach to their household budgets during the global recession, using debit cards rather than running up debt on credit cards.

The Reserve Bank of Australia’s (RBA) annual report on the payments system was tabled in parliament on Wednesday.

It showed that while credit card transactions had risen 3.8 per cent in 2008/09 compared to the previous financial year, debit card transaction surged 14.7 per cent.

It said this was partly due to the economic slowdown over the past year.
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Teenagers on MySpace are being offered a reloadable prepaid Visa card to securely spend their money online.

The card from ANZ Bank is the first of its kind in Australia, targeting social networking site users.

MySpace spokesman Nick Love said the card would give under 18s, who aren’t eligible for credit cards, more freedom and security to make purchases on the internet.

“(They can) spend their own money on items such as concert tickets and clothes,” he said.

Teens can also use the card to buy prepaid phone credit through the site.
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photo credit: apesaraAustralians are shifting from credit to debit cards as consumers become more financially conservative because of the economic downturn, an economist says.

Commsec economist Savanth Sebastian said consumers were watching their spending and how they paid for goods and services in response to the financial crisis.

The value of purchases and cash advances by debit cards rose by 16.1 per cent in the year to June, while credit card use by value increased by 5.5 per cent over the same period, Reserve Bank of Australia (RBA) data revealed this week.

“What you are seeing in this financial crisis are consumers being a lot more savvy in the financial sense in terms of managing the household budget and a lot more aware of unnecessary expenses,” Mr Sebastian said.
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Premier Anna Bligh says Queenslanders should view the state’s debt as a mortgage, not a hefty credit card bill.

Queensland is expected to record a $1.95 billion deficit for 2009/10.

Its debt level is projected to blow out to $85.5 billion by 2012/13 - the highest of any state.

A day after the Queensland budget was handed down, Ms Bligh said that borrowing to invest in infrastructure during a global recession was good debt.

The opposition has criticised the government for wracking up an enormous debt on what it called the taxpayer credit card.
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photo credit: Andres RuedaThe total value of credit and charge card transactions, including advances, rose by 9.6 per cent in March, figures from the Reserve Bank of Australia (RBA) show.

Australians spent $18.775 billion on their credit and charge cards in March, up from $17.130 billion the previous month and the second straight monthly increase.

The rise in spending was matched by an increase in repayments, the RBA’s monthly bulletin says.

Credit card repayments rose 17.5 per cent in March to $19.720 billion - the highest level since December.
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Consumers are putting off buying new cars and foreign goods, and would rather pay off credit card debt, fearing they might lose their jobs.

Reserve Bank of Australia (RBA) assistant governor Malcolm Edey says Australia is being affected by the “very severe” global economic downturn.

“In this environment, it’s not going to be possible for Australia to avoid some further weakness in 2009,” Dr Edey told a business breakfast in Sydney.
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Westpac Banking Corp, the country’s biggest financial company by market value, will cut the interest rates on its credit cards.

The bank cut the interest rate on its lowest interest Low rate credit card by 0.65 percentage points to 11.99 per cent.

The rate on its Business Choice Everyday card was cut to 0.8 percentage points to 13.39 per cent.
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Federal Treasurer Wayne Swan has issued a please explain to bank chiefs over their failure to pass on interest rate cuts to credit card customers.

Reserve Bank data shows Australians owe nearly $45 billion on their credit cards with some incurring interest charges of up to 20 per cent - nearly five times the official cash rate.

Mr Swan said he would be having discussions with bank chiefs shortly about passing on interest rate cuts to credit card users.
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Chairman of Aussie, Mr John Symond, today urged credit card consumers to urgently check their interest rates and seek a low rate card, following reports that some providers have lifted their rates over the last month.

He said, “Australian credit card holders are wasting thousands of dollars by sticking with multiple or high interest credit and store cards, instead of consolidating their debts into a low rate credit card or personal loan.
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The Finance Brokers Association of Australia (FBAA) believes banks need to look beyond mortgages when passing on interest rate relief to struggling households and also focus on personal finance products such as credit cards.

FBAA National President, Peter White, said while the Association accepts that due to the credit crisis the major banks may not be in a position to pass on the full RBA 1.0 percent lowering of rates on mortgages there are many other personal finance products where excessive margins can be reduced to reflect the cut in official rates.
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Struggling families are turning to credit cards to make ends meet, a recent survey reveals.

The Dun & Bradstreet (D&B) Consumer Credit Expectations survey found that 30 per cent of families with children are turning to credit cards to pay for items they otherwise couldn’t afford.
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Consumers are avoiding personal loans and staying with credit cards even though they have higher interest rates because they cannot be bothered with the loan application, a survey says.

A Citibank survey has found consumers prefer to pay for large purchases with their credit card rather than take out a personal loan. Full Story