Credit card transactions 'down to 42% of all deals'

Over the past five years, the amount of people using credit cards to purchase items has decreased, figures suggest.

The use of credit cards to purchase goods has decreased in the past five years, according to new figures.

Data from the Reserve Bank of Australia (RBA) found there has been a 17 per cent decline during the time period, resulting in a credit card being used for 42 per cent of all card transactions, News Limited Newspapers reports.

The publication suggested that one reason for the decline could be the rise of the debit scheme card – of which use has risen by 30 per cent in the last 12 months.

More than 275 million deals take place in Australia every month, with 116 million currently attributed to credit cards.

However, figures released by the RBA also revealed that there was an increase of 6.05 per cent in the overall amount of charge and credit card transactions in February, compared to January.

Datamonitor senior analyst Harry Senlitonga believes the hike in the use of the debit card could be because people are not required to pay any fees due to money being taken from a savings account.

This also restricts the amount of debt, because if there are no funds left in an account then it will not be possible to pay out from it.

But by using debit scheme cards, people can benefit from being able to access a credit card and spend their own cash too, Mr Senlitonga noted.

He added that the number could fall to below 40 per cent if the trend continues to escalate.

Mark Carnegie, writing for Business Spectator, suggested earlier this month that the average Australian spends a year of their life paying off the interest built up on credit cards.

He suggested that if people increase the mortgage on their house then they could pay off their Aussie credit card and then destroy it to ensure they are not tempted to rack up further debt.

By Joe Letts