Consumer credit demand strong in Australia

Credit card applications rose during Q4 of 2013-14.

Credit card applications rose during Q4 of 2013-14.

As the Australian economy continues to improve, it seems that the number of Australians seeking both new credit cards and personal loans is also on the rise. 

This is according to the Veda Quarterly Consumer Credit Demand Index released earlier this month. Based on its statistics from the final quarter of the last financial year, demand for credit cards rose 15 per cent, while personal loan applications increased 6.4 per cent.

Despite these figures, it appears consumers are cautious about running up credit card debt with fewer balances and accruing interest over the same time period.

"While the number of payments made using credit cards has been rising strongly, repayments on credit cards have also been strong," , Veda's General Manager of Consumer Risk Angus Luffman explained.

Mr Luffman also went onto comment on why credit card applications rose so much during Q4.

"The continued high level of campaign activity on the part of major card issuers along with the benefits of product innovation, particularly contactless payments, is driving the applications for cards as consumers seek out the product that most suits their needs," he added.

Where are these consumers based?

It is easy to forget that the several states and territories are still struggling with slowing economies. As such, this is reflected in Veda's breakdown of where these credit card and personal applications originate.

In relation to credit card applications, South Australia and NSW saw the largest increases over the quarter; improving 18.6 per cent and 18.1 per cent respectively. 

Conversely, Tasmania and the Northern Territory (10 per cent and 9.4 per cent) attracted the most personal loan applications during the same time period.

Mr Luffman believes that the Australian economy should continue growing, based on these statistics.

"Overall, Veda's latest credit demand data suggests that strength in interest rate sensitive sectors such as retail and in the housing market is continuing, which should help to support growth as Australia's economy responds to the downturn in mining-related construction," he concluded.

Veda's statistics relate well to the recent ANZ-Roy Morgan Consumer Confidence survey which found confidence increased 0.6 per cent to 112.5 this week. Although down on 2014 numbers, it is moving in the right direction.

With more credit cards and personal loans out in the market, it does raise the risk of unpaid debts. If this is something that your business is dealing with, contact the expert team at Commercial Credit Services today.

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