Credit card marketing on the up

People are being flooded with low card fees, rewards points and other incentives in an effort to take out credit cards, it has been reported.

Australians are increasingly being encouraged to take out credit cards, it has been revealed.

Indeed, a Business Day article points out that marketing activity by banks has risen as of late, with people offered cards which come with an interest free period on purchases, more reward points, increased spending limits, reduced card fees and other incentives.

Christopher Zinn, spokesperson for consumer group Choice, states that recent months have seen a "free-for-all" in the credit card market.

"It's one of the more expensive ways to actually borrow money and one of the more profitable areas of the bank's operations," he claims.

Those that are looking to take out a credit card may wish to compare accounts in order to ensure they get a competitive product.

However, a rise in such promotional activity comes as the publication points out that the use of debit cards is outstripping that of credit cards.

The latest Reserve Bank of Australia (RBA) data shows that over the year ended July, the number credit card purchases made increased three per cent, compared to 32.5 per cent growth among debit cards.

"Debit cards have been positively affected by the recession because in times of uncertainty, people want control, they want to get rid of doubt," Mike Ebstein, director of MWE Consulting, states.

He adds that there is a sense of "uncertainty" attached to credit cards as consumers' spending on such product is only curtailed by the size of their credit limit, as opposed to debit cards where expenditure is constrained by the amount of money held in a bank account.

Speaking earlier this month, Commsec chief economist Craig James told that the Age that the global financial crisis has caused to Australians to take a "conservative attitude" towards how they spend money.

His comments come as RBA research revealed credit card spending in July stood at $19.1 billion, a fall from the $19.4 billion recorded in June.

Written by Kate Guthrie