Conchie consumers pay down debt

Caution rules … spending on discretionary items is down.Consumers are cutting back on debt and increasing their use of debit cards as they become more cautious about spending and borrowing, a survey has found.

Expectations for household debt were at 18 per cent for the March quarter, a fall from 22 and 26 per cent for the last two quarters, the Dun & Bradstreet’s Consumer Credit Expectations Survey, released today, found.

The national Newspoll survey of about 1200 people this month is reflected in recent economic data, which has seen Australians adopt a “balance sheet repair” mentality of paying off debt, increasing savings and paring down on discretionary spending.

“Overall, we’ve witnessed a sizeable shift in the spending behaviour of the Australian consumer. There is a greater degree of consideration being applied to each spending decision and a greater focus on spending within our means,” Dun & Bradstreet’s chief executive Gareth Jones said in a statement.

“This attitude towards spending, especially on discretionary items, can have a negative knock-on effect for Australian businesses. … The upside to this ongoing mood of consumer conservatism is that we may see an improvement in the levels of personal debt and delinquency, which should help those households experiencing financial stress.”

The survey found that the number of people with debit cards were at their highest point in more than three years, at 77 per cent, while slightly less than half were concerned about their financial situation, down from 59 per cent in the September quarter.

Fifty-five per cent of those surveyed said they did not expected to have difficulty meeting their financial demands in the next three months, up from 48 per cent in the September quarter.

Economist Stephen Koukoulas, who advises Dun & Bradstreet, said consumers’ moves to pay down their debt would make them more secure in the medium term if there was a slowdown in the Australian economy.

“If there is no slowdown in the next year or two the current financial circumstances of consumers suggests they will be well placed to underpin ongoing strong growth in consumption and other spending,” Mr Koukoulas said.

Commonwealth Bank credit card data for the holiday period, which was released in mid-January, found that consumer spending rose only modestly from the year before.

The average credit card balance had fallen by a record 2.3 per cent over the year to November, according to Reserve Bank data released around the same time.

At the same time, economists said the national household savings rate was near 10 per cent, the highest in three decades.

The original release of this article first appeared on the website of Hangzhou Night Net.

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