Recent data from the Reserve Bank (RBA) indicated a notable shift in consumer behaviour, with Australians increasingly opting for debit over credit in their spending amidst rising cost-of-living pressures.
The RBA’s latest statistics for April highlight a 2.59% monthly increase in debit card transactions and a 10.56% rise year-over-year. Conversely, credit card usage saw a marginal decline of 0.64% in the same month, reflecting a cautious approach towards credit reliance.
While the use of credit cards is on the decline, the average balance accruing interest on personal credit cards experienced a slight uptick, now standing at $3,674. This increase of 0.17% over the month suggests that while consumers are using credit cards less frequently, those who do face challenges in paying down their balances.
Steve Mickenbecker (pictured above), Canstar’s finance expert, comments on the evolving financial behaviours.
“There is no denying that there is a high level of cost of living and interest rate stress in the community,” Mickenbecker said. “We are seeing it in distressed home sales, access to bank hardship provisions, and reliance on social support.
“However, the Reserve Bank credit and debit card payments statistics for April show that the pain is unevenly spread, with debt steady and spending on credit cards declining while both the number and value of transactions on debit cards is up."
According to Mickenbecker, Australians have made significant strides in reducing their credit card debt over the past decade.
“We have almost halved credit card debt over the past 10 years, and even though the pace has slowed since the COVID early release of superannuation, Australians are looking committed to staying on top of it and are resisting relapsing,” he said.
Further analysis by Canstar revealed that while overall spending on cards has increased, the preference for debit cards continues to strengthen. Over the past year, the increase in credit card spending was just over $1 billion, significantly less than the $5.74bn surge in debit card usage. 
“Use of debit cards is well up over the last 12 months, suggesting that overall, we are covering the higher cost of living out of our own pockets,” Mickenbecker said.
Mickenbecker acknowledged the ongoing financial strain on many households and suggested strategies for managing debt more effectively.
“The residual debt is still a drain on the finances of many households and statistics can disguise how tough it is for some,” he said. “The time will come when the cycle turns and the finances ease, meanwhile moving debt into the lowest interest rate option available such as a zero percent balance transfer will minimise the damage.”
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