Credit card purchases climb despite cash rate hikes

Australians made almost $25 billion worth of purchases on their credit cards in May, despite the growing cost of living pressures and rising interest rates.

New RBA figures show the value of credit card purchases rose $2.76 billion – or 12.5 per cent – month-on-month, in original terms. This is based on personal credit card data.

However, debt accruing interest on credit cards continued to decline in May, albeit at a slowing rate, dropping by $8.3 million (0.05 per cent) from the previous month.

The number of credit card accounts also fell slightly by just over 3,000 accounts, to a total of 12.38 million.

Credit card statistics: personal credit cards in May 2022

Note: credit card analysis is based on personal credit card data and excludes commercial cards.

Source: RBA, released 7 July 2022, original data. Monthly change is April 2022 to May 2022, year-on-year change is May 2021 to May 2022.

RateCity.com.au research director, Sally Tindall, said: “Australians were buying up big at the shops, spending close to $25 billion on their credit cards in May, despite the cash rate hike.”

“Governor Lowe has been warning Australians to get ready for rate hikes, but that did little to discourage people from tapping their cards at the shops in May,” she said.

“Credit card purchases increased by over 12 per cent in May, despite the fact that consumer confidence was on the slide. However, we expect credit card spending will decline in a couple of months as the reality of rising rates and inflation start to bite.

“Credit card debt has been slowly falling over the last three months, however, the fear is, rising living costs could see people relying on the credit card to make ends meet.

“While reaching for the credit card can be tempting, know that it is a quick fix that can turn into a problem in the blink of an eye,” she said.

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