Credit card debt crunch 'could be coming'
Tuesday, 29 October 2019
New Zealanders are putting more than ever on their credit cards.
New data from research and comparison site Finder showed New Zealanders are now using their cards to process $4 billion of purchases a month, a record amount.
That does not include contactless debit cards.
It is the equivalent of $821 for each New Zealander – and almost one in four New Zealanders told Finder they did not have a credit card.
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In the year to August New Zealanders collectively made $47.5b in purchases on their credit cards, up 5 per cent from the year before.
Payments NZ statistics show Kiwis made an average of 144 credit card and contactless card transactions each in 2018, up from 123 the year before.
Outstanding credit card balances are growing, though at a slower rate.
Reserve Bank data shows that New Zealanders were carrying $7.34b in credit card debt in September, up from $7.21b at the same time last year but down from a peak of $7.46b in December.
Claire Matthews, a banking commentator at Massey University, said that suggested the increased spending was bring paid off.
Mean number of electronic card transactions per person in New Zealand.
'However, balances tend to peak in January, post-Christmas, so we may see record debt levels early in the new year if the spending continues at above average rates.'
Finder's research showed 17 per cent of New Zealanders said they could not manage their finances without a credit card.
Angus Kidman, FInder's editor-in-chief said the increase in card spending could be due to consumers taking advantage of rewards programs and the convenience of contactless credit cards.
'The credit card is often our default choice - who wants a wallet loaded up with cash? The ability to earn rewards points also makes credit cards increasingly popular,' he said.
But despite the growth of card payments, the amount of cash in circulation is also increasing.
This year, there was more than $6.5b in banknotes in the hands of the public, up from $5.53b two years ago.