Credit card spending falls in December, but outstanding balances flat

Credit card spending fell 2.7% in seasonally adjusted terms in December to NZ$2.595 billion and was down 4.4% from the same month a year ago, confirming anecdotal evidence that the Christmas/Boxing Day retail season was depressed. This was the biggest one month fall in card spending since records began in 1994. Reserve Bank figures show total credit card advances fell 0.8%, the biggest fall since July 1998. But interest bearing balances were flat for the month and up 9.3% from a year ago. This juxtaposition suggests consumers are using their cards less, but are paying off their balances less as well, allowing their interest bearing balances to grow. Although it's interesting in December that the interest bearing balances didn't grow for the first time since February last year. It says that lower interest rates, lower petrol prices and tax cuts are putting a bit more cash in people's pockets and encouraging them to repay debt. * This article was first published in our daily subscription newsletter for the banking and finance industries. The email costs NZ$365 per annum and carries exclusive news and analysis for New Zealand banking and finance industry executives, regulators and investors. Sign up for a free trial here.