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Most Aussies paying with savings over credit as debit card use sharply rises: ABA

Most Aussies paying with savings over credit as debit card use sharply rises: ABA

Payment by debit cards in Australia has outweighed credit cards by almost three times, according to new data released by the Australian Banking Association (ABA).

The ABA analysis of Reserve Bank of Australia (RBA) data revealed that the use of debit cards lifted by 17 per cent in 2020, while cash withdrawals fell by 10 per cent in the same period. Meanwhile, cheques made up less than half a per cent of all transactions.

ABA Chief Executive Anna Bligh said while debit card usage has been increasing over the last decade, it has been accelerated as a result of the pandemic.

“Debit cards continue to be the number one choice when Australians purchase something in person or online, and that means the majority of us are paying with our savings instead of credit,” Ms Bligh said.

“This trend hasn’t always been the case. In 2006, Australians used credit and debit cards equally. Twelve years later in 2018, Australians used debit cards at almost double the rate of credit cards and just three years later, it’s almost triple.”

ABA graph transactions

Source: ABA

Despite these figures, recent research from Citi found that credit card spending for April 2021 was 35 per cent higher than April 2020 (the start of the pandemic), marking three months in a row in which credit card spend was above COVID levels.

According to the ABA, the increase in the use of debit cards is matched by the decrease in cash withdrawals, which is a representation of the decline in cash transactions.

“Unsurprisingly, particularly due to stores encouraging cashless transactions throughout the pandemic, the use of cash declined a further 10 per cent on the previous year, which is another sign of Australia moving closer and closer to a cashless society,” Ms Bligh said.

“Australians love new technology. More and more of us are doing our banking online or through apps and we can expect the use of cash to continue its decline in 2021 and the future.”

During the COVID-19 pandemic, banks issued 325,000 debit cards to customers who had not previously used them to assist with purchases where cash was not an option, according to the ABA.

If you’re looking for a new way to pay for your purchases, RateCity can help you compare bank accounts that offer debit cards. Consider using RateCity’s comparison table to view features such as fees, interest rates, PayPass or payWave options, rewards programs and more.

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This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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