This is what you need to know about using your credit card

Credit cards are a big deal in Australia, but just how big?

Finder.com.au recently released their State of the Credit Card Market Report and crunched the numbers to show exactly how Australians are using their credit cards.

Here's some of their findings...

How many credit cards do Australians have?  

There were 16,694,597 credit cards in Australia by the end of 2017, with 8,298 extra cards added to the market through the year.

There were 2,779,225 more credit cards in circulation in December 2017 than there were ten years ago.

This is roughly one card (0.9) per adult.

This statistic has held steady since August 2006, but was a lot lower (0.6 cards per adult) twenty years ago (December 1997).

How much do we spend? 

Australians made 2.7 billion purchases on credit cards in 2017, spending a total of $315.6 billion.

This is up from 2.5 billion purchases and a $302.8 billion spend in 2016.

The value of the average purchase has fallen from a high of $152 in August 2008 to $112 in December 2017, with Aussies spending $1,573 per month on average in 2017.

The average credit card balance currently stands at $3,170 with $1,903 of the balance costing the cardholder interest.

However, Australians are getting better at paying off their debt as the average balance accruing interest is down significantly from $2,471 in April 2012

We paid more off in 2017 than ever before

Australians paid $341 billion off their credit cards in 2017, with an average repayment of $1,700 per month.

This is the highest amount ever paid off in one 12-month period.

The average amount paid off per month hit an all-time high of $1,811 in May 2017.

Your card's extra features make a big difference in the fees you pay

The average credit card interest rate fluctuates from month to month, but is around 17%.

Based on the average balance of $1,903 accruing interest, a cardholder would pay $174 in interest if they paid off their balance in just one year.

However, the purchase rate varies hugely depending on the type of card.

Rewards cards usually have a higher interest rate, close to 20%, while low rate cards are available with an average interest rate of 12.28%.

Fees also vary depending on card type.

Taking out cash on your card will cost you, but Aussies are doing it less than ever

Withdrawing cash from an ATM with a credit card is an expensive way to access quick funds as most credit card users will be charged a 2-3% cash advance fee and start paying interest at a higher rate as soon as their cash is withdrawn.

Gambling, purchasing travellers cheques and money orders, purchasing store value cards (such as gift cards), paying bank bills and making BPAY payments can also be considered cash advances when processed via credit card.

Cash advances on credit cards totalled $9.3 billion in 2017, with the average cash advance transaction over 12 months being $389. 24,058,786 cash advances were processed in 2017.

This is down 1.13 million on the previous 12 months.

The most popular month for cash advances was May when 2,189,153 transactions were processed.

This is 1.3 million transactions less than May 2006 when 3,510,543 transactions were processed, making May 2006 the busiest month ever.

We could soon be spending more on debit cards than credit cards

The increased availability of EFTPOS terminals has led to a huge surge in the number of debit cards on the market.

There are now 46 million debit cards in circulation. That’s 2.8 debit cards per credit card, and 2.5 debit cards per adult.

The total value of purchases on debit cards is increasing at a faster rate than on credit cards.

In fact, a finder.com.au projection of RBA data shows that debit card spending could overtake credit cards as soon as August 2018.

The increasing ease of debit card use means that Australians are using them to pay for lower value items.

The average purchase on a debit card has fallen from $66 in December 2008 to $50 in December 2017.

How is the uptake of plastic payment affecting old-fashioned cash and cheques?

Increased usage of both credit and debit cards has led to a sharp decline in the number of Australians withdrawing cash and writing cheques. 

A projection of data from the RBA by finder.com.au reveals that despite many banks dropping ATM fees, ATMs could be a distant memory in Australia by 2036.

There were 26.9 million less ATM withdrawals in December 2017 than there were 9 years ago

The number of ATM withdrawals per month has fallen from a high of 78.4 million in December 2008 to just 51.5 million in 2017.

A similar forecast of cheque usage data from the RBA shows that cheques could disappear completely from circulation in Australia by the end of 2019.

Read more at: Finder.com.au

About Michael Yardney Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.