Concern Over Credit Card Spending
Sun Herald
Sunday December 28, 1997
THE use of plastic money has jumped by as much as 50 per cent over this time last year, banks and stores report.
As the record pre-Christmas splurge continues during the sales, shoppers have rejected - or exhausted - cash in favour of credit, store and debit cards.
Retailers said they were on target for a $5 billion spending bonanza - up about 6pc - when final figures are in for the November-January period.
The Retail Traders Association said the figure would make this Christmas the biggest-ever retailing period.
A week before Christmas Eve, the Commonwealth Bank - the nation's biggest issuer of credit and debit cards - was processing more than one million transactions a day.
A bank spokeswoman said the overall figure for cards was up 30-40pc, with credit card use up 10-20pc.
The National Australia Bank also reported a 40pc surge in card use.
First Data Resources, which monitors card transactions, said Christmas eve had seen a 50pc jump in card use.
The spending spree has led to fears of a jump in defaults on credit cards as some consumers struggle to meet repayments on overblown accounts.
Creditline Financial Counselling services manager Betty Weule said consumers should consider what they will have to pay back, rather than what credit limit they can spend up to.
"Instead of thinking `Wow, I've got $5,000 to spend`, credit users should think `I've got $5,000 to pay back in the New Year'," she said.
Banks continue to charge rates on cards of between 12.5-18pc and banking analysts predicted yesterday that "banks will hit the Christmas jackpot".
MarketFaxts director Chris Gosselin said: "I would imagine that defaults will be a little larger next year, especially in the second quarter."
© 1997 Sun Herald
