Shopping is back in vogue as rising confidence encouraged Australians to whip out their plastic in November. Sales made on charge and credit cards that month rose 4.2% from October, from $19.19 billion previously to $20.00 billion, in the largest monthly spending spree since December 2008, according to figures released by the Reserve Bank of Australia.

The average amount outstanding on credit cards rose to $3196 in November, from October’s reading of $3141, a gain of 1.8%. The total amount outstanding on all credit cards rose to $46.05 billion from $45.15 billion, a jump of 2.0%. That’s the fastest pace of growth for outstanding credit and charge card loans since February 2008.

Contributing to that jump was a slowing rate of repayments. Those fell by 0.6%, to $19.53 billion, reversing the trend of reducing debt that took hold during the recession.

Rising consumer confidence has overcome three interest rate hikes by the RBA late last year, leading to increased retail sales and higher levels of charging purchases on plastic, a common phenomena in the holiday lead-up. The RBA next meets on 2 February, and another 25 basis point hike seems likely.

“The improvement in economic conditions and the sharp rise in consumer sentiment is starting to filter through to credit card usage,” said Savanth Sebastian, an economist with Commsec. “No doubt the sustained improvement in labour market conditions, and rising wealth, is giving consumers more confidence to use plastic.”

Source: www.theaustralian.com.au

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