People who are wary of accumulating personal debt are increasingly using debit cards to control their finances.

Financial services group Canstar Cannex senior financial analyst, Harry Senlitonga, says debit card usage has increased at a greater rate over the past year than use of credit cards and electronic funds transfer point-of-sale (EFTPOS) facilities.

Debit card transactions increased by 39 per cent in the year to November 2009, while credit cards were up by 14.9 per cent and EFTPOS rose by 12.45 per cent, Reserve Bank of Australia (RBA) data shows.

Mr Senlitonga says debit cards have become more widely available in the past two years, with all the major banks now offering the product.
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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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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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Debit cards are set to become the most popular form of payment by the end of the year, as it saves consumers from clocking up debt, a report says.

Consumers have increasingly turned to debit cards as their preferred payment method, shunning credit cards whenever possible due to hefty surcharges and reluctance to go further into debt in tough economic times.

The report by banking research firm East & Partners found 28.9 per cent of all merchant sales were paid with a debit card in the six months to June, up from about 24 per cent in the previous six months.

East & Partners financial markets analyst Zoran Knezevic said after a gradual shift towards debit cards over the past few years, the pace had accelerated quite rapidly over the past six months.
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Consumers are increasingly shunning credit cards and using debit cards instead to pay for purchases as they err on the side of financial responsibility be cause of the economic slowdown, MasterCard Australia says.

MasterCard Australia executive vice-president, Australasia, Eddie Grobler said the company was noticing a change in the way consumers chose to pay for items.

“We’ve seen a change in terms of behaviour,” Mr Grobler told AAP after an address at the American Chamber of Commerce in Australia on Wednesday.
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Australians are preferring the cash and shunning credit as they become more conservative with their finances, the latest figures from the Reserve Bank of Australia (RBA) show.

The value of purchases through debit cards grew by 16.5 per cent in January compared with the same month in 2008 and contrasted with a 2.6 per cent decrease in the value of credit cards purchases, RBA data revealed this week.

Commsec equities chief economist Craig James said Australians were becoming more frugal with their money, particularly in using credit cards.
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