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May, 2018 5:29 AM



Consumers shun credit cards

Consumers shun credit cards

The number of credit card accounts hit a 2-year low in March and card numbers are falling at a record annual rate.

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14.05.2018 03:47 PM

Aussies say ‘no’ to credit cards; Petrol pain
Credit & debit card lending; Weekly petrol prices

Credit cards: The number of credit card accounts hit a 2-year low in March and card numbers are falling at a record annual rate.

Credit card balance: The average credit card balance fell by $8.90 to $3,171.80 in March. In smoothed terms (12 month average) the average balance was unchanged over the year.

Petrol: According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 1.1 cents last week to 145.2 cents per litre.

Regional price: The Singapore gasoline price is holding near 3-year highs, pointing to higher pump prices in Australia in coming weeks. Credit card data is important for the retail and financial sectors. The petrol figures have implications for retailers, especially petrol marketing groups.

What does it all mean?

How times have changed. Aussie consumers are saying ’no’ to credit cards but ‘yes’ to debit cards. The number of credit card accounts have hit a 2-year low. And the 1.1 per cent annual fall in credit card accounts is the biggest decline ever recorded.

In contrast to credit cards, the number of debit card accounts are at record highs and account numbers are lifting at a near 4 per cent annual rate. In part Aussies are rejecting debt. Others prefer to know the state of their finances in real time rather than adjust for transactions made on credit. And while those with credit cards are using them more regularly, more are choosing to pay off all the outstanding balance by the due date.

In Australian dollar terms, the price of Singapore gasoline hit fresh 3-year highs last week. So the relief for motorists at Aussie petrol pumps last week will be short-lived. Pump prices fell last week due to the down-draft of discounting cycles in Sydney, Melbourne and Brisbane. But pump prices of $1.40-$1.50 a litre look to become the norm.

High gasoline prices represent the main inflationary threat in industrial countries such as the US and Australia. While motorists feel the pain at present, the risk is that items with a high transport component will cost more – items like fresh food and other groceries.

Demand for oil remains firm due to the strength of the global economy. But OPEC oil producers are being successful in limiting market supplies, and thus supporting prices.

What do the figures show?
Credit & debit card lending:

The average credit card balance fell by $8.90 to $3,171.80 in March. In smoothed terms (12 month average) the average balance was unchanged over the year.

Of credit cards attracting interest charges, the average outstanding balance fell by $63.10 in March to $1,927.40. In smoothed terms (12 month average) the average balance was down by 1.5 per cent on a year ago.

The average credit card limit rose by $56.80 to $9,315.00 in March to be up 2.9 per cent over the year.

Usage of credit card limits stood at 34.1 per cent in March, near the 19-year low of 33.6 per cent set in October last year.

The number of credit card accounts stood at a 2-year low of 16.545 million in March, down by 1.1 per cent over the year.

The number of debit card accounts stood at a record high of 46.887 million in March; up by 3.9 per cent over the year.

The number of ATM transactions in March was down by 5.6 per cent over the year. Transactions have been consistently falling in annual terms for over five years.

The number of debit card purchases in March were 14.7 per cent higher than a year ago with the value up 11.3 per cent.

In March, the average cardholder made 13.6 transactions on credit cards with 11 transactions made on debit cards.

Petrol prices

According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 1.1 cents to 145.2 cents a litre in the past week.

The metropolitan petrol price fell by 1.5 cents to 144.2 cents per litre, and the regional price fell by 0.2 cents to 147.2 cents per litre. The gross retail margin fell from 14 cents to 12.5 cents.

Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 6 cents to 141.9 c/l), Melbourne (down by 4.5 cents to 141.4 c/l), Brisbane (down by 5.4 cents to 144.3 c/l), Adelaide (up by 22.6 cents to 155.4 c/l), Perth (up by 2.5 cents to 145.1 c/l), Darwin (up by 0.2 cents to 150.9 c/l), Canberra (up by 0.1 cents at 148.1 c/l) and Hobart (up by 1.4 cents to 152.1c/l).

The national average Australian price of diesel petrol rose by 1.8 cents to 148.1 cents per litre. The metropolitan price rose by 2.4 cents to 148.8 c/l and the regional average price rose by 1.4 cents to 147.5 c/l.

Today, the national average wholesale (terminal gate) unleaded petrol price stands at a 3½ year high of 133.5 cents a litre, up by 0.7 cents over the week. The terminal gate diesel price stands at 137.2 cents a litre, up by 1.6 cents over the past week.

Last week the key Singapore gasoline price rose by US$4.90 or 6 per cent to US$87.20 a barrel. In Australian dollar terms the Singapore gasoline price rose by $6.56 or 6 per cent to a 3½-year high of $115.74 a barrel or 72.79 cents a litre.

MotorMouth records the following average retail prices for capital cities today: Sydney 138.6c; Melbourne 138.9c; Brisbane 141.9c; Adelaide 149.7c; Perth 135.8c; Canberra 148.2c; Darwin 151.0c; Hobart 152.9c.

What is the importance of the economic data?

The Reserve Bank releases data on credit and debit card transactions each month. The credit card figures are useful in highlighting consumer borrowing and spending trends.

Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory's metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.

What are the implications for interest rates and investors?

Higher fuel prices represent an inflationary threat, lifting business costs and causing consumers to pay more for a raft of items. The $64 question is whether businesses can, or will, pass on higher costs to consumers.

While there was some interest last week in the supposedly low level of gasoline stocks held in Australia, the latest data shows that the broad position hasn’t changed over the past eight years, with no consequence for the industry or consumers.

Since mid-March, Aussie families have had to find an extra $15 a month to fill their cars up with fuel. Discretionary spending is likely to come under further pressure.

CommSec expects interest rates to be unchanged for the foreseeable future.

Published by Craig James, Chief Economist, CommSec
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