The end of an era !

Before the GFC hit jobs and the spending habits of ordinary Australians, we indulged in an era of ever increasing credit card debt.   The house price bubble convinced us we were rich and those insidious little plastic cards made it possible to have it all now - and defer paying until a much later date.

The retail industry is crying poor because we are just not spending like we did in a past era and now the " mechanics of money " have changed in a way reflected in statistics.   For the first time since " Bankcard " burst onto the scene decades ago, the average balance owing on credit cards has fallen - by $ 35.90 to a new low of just $ 3262.30 per person.

Not only do we owe less money, but the number of new credit cards issued has stopped dead in it's tracks, replaced by the popularity of Debit cards, which allow us to access our own money when we wish to make a purchase.   Debit cards use has increased by 6% and it seems that " impulse spending " is on the decline.  As the retail industry ruefully acknowledges - we now tend to think long and hard before we commit to make a purchase.

Debit cards have also ushered in a new way of thinking when it comes to accessing cash.   The days of trekking to the nearest ATM to withdraw cash money are being replaced by using the " cash out " facility attached to Debit cards and this has increased 42.7%.   Unfortunately, not all merchants who accept Debit cards provide this service, but it is universal in all the big supermarket stores and by most major merchants, where it serves the purpose of increasing security by reducing the amount of cash on hand.    When a customer withdraws cash money, that amount is instantly credited to the merchants bank balance.

Of course, the " win some - lose some " rule applies whenever a change occurs in the way we do things.  The banks are seeing the number of cheques written by customers dwindle as customers pay electronically on their computers or make over the counter payments at post offices.    Those same post offices are seeing a huge drop in mail traffic as merchants either bill their customers electronically, or enter into monthly bank payment arrangements to settle bills.

The free spending age came to an end with the GFC and it seems we have gained a new degree of caution when it comes to debt.   Unfortunately, the electronic era has opened up opportunities for the criminal fraternity to circumvent security arrangements and we are constantly faced with new scams to drain bank accounts.   At this stage, the banks are making good on legitimate fraud, but the fast evolving world of electronic access means every card holder needs to understand the system and be aware of risk.