Aussies 'increasingly taking out credit cards'

People are applying for credit cards and other borrowing products with greater frequency, new research shows.

Australians are increasingly looking to take out financial products such as credit card and personal loans, it has been revealed.

Research carried out by RateCity reveals that in the three-month period leading up to September, the number of people applying for a credit card has risen by some 50 per cent from the previous quarter.

Meanwhile, those seeking out personal loans and home loans have risen by 53 and 47 per cent respectively.

On the other hand, applications for saving accounts and term deposits have fallen nine between August and September, while a fall of six per cent was seen between July and August.

This is a reversal of the trend of the increasing popularity of saving accounts noted this time last year, RateCity spokesperson Michelle Hutchison states.

Ms Hutchison points out that such figures come as research from the Australian Bureau of Statistics revealed total personal finance commitments increased 4.1 per cent over the course of August to $7.184 billion, compared to the $6.903 billion noted in July.

Similar sentiments were echoed by chief executive Damian Smith, who states that as people now have greater confidence in the economy, not only are they borrowing more money but they are looking to spend the cash tucked away into their saving accounts.

He adds that at the peak of the economic crisis people were "holding on to their money" and looking to compare accounts in order to get a competitive rate of return.

The news comes as Forebrand recently pointed out the Australian banking sector is "set for an almighty battle" ahead of Virgin Money and Citibank's forthcoming launch of a new credit card product.

Research from the firm revealed that Westpac dominates the fee-free credit card market, accounting for 32 per cent of all such products, in addition to making up 40 per cent of debit cards.

Commonwealth Bank, on the other hand, dominates the reward credit card scene, accounting for more than a quarter of all such products.

Posted by Mark Hornby