The number of people with credit cards is falling and the average age of credit card holders is rising, credit bureau Centrix says.
In its latest monthly credit indicator report Centrix says the number of people with a credit card has fallen steadily since 2019. Centrix says there are now about 1.99 million credit card holders, 12% fewer than in 2019. And over the same timeframe the number of borrowers holding multiple credit cards has fallen 45% to about 550,000.
Meanwhile, the average age of a credit card holder has increased by six years over the last decade to 57, with the average age of new customers relatively stable at about 42.
"This suggests the ageing profile of the credit card market is being driven largely by declining numbers of new customers, particularly younger borrowers, rather than a material increase in the age at which people first take out a card," Centrix says.
It says younger people are using credit cards less, instead favouring the likes of buy now pay later, digital wallets such as Apple Pay and Wise, alongside the increasing use of debit cards.
Another factor Centrix cites in the decline of the credit card is responsible lending obligations under the Credit Contracts and Consumer Finance Act.
"Younger borrowers have generally experienced lower approval rates as lenders have tightened affordability assessments. In addition, consumers holding multiple credit cards have increasingly consolidated or closed unused accounts to improve their affordability profile for future borrowing," Centrix says.
"The ongoing shift towards digital payments has accelerated the decline. The adoption of digital payment methods increased significantly during Covid and has continued to reduce the reliance on traditional credit card products."
Reserve Bank data shows total personal credit card advances outstanding of $5.428 billion as of May, with interest being paid on $2.75 billion of that. The weighted average interest rate on personal interest bearing advances was 19.9% in May, with the Reserve Bank saying this was the highest rate recorded since its data series began in July 2000.
In 2019 New Zealanders were paying interest on more than $4 billion of credit card debt.
Centrix says credit card arrears were at 3.8% in June, historically low levels and largely unchanged year-on-year.
*The charts below come from Centrix.
10 Comments
The more people pay for stuff with what they have got on hand, all the better for them I would say. What used to really annoy me was the unsolicited increase to your credit card limit, alongside the not so tacit suggestion of now being able to go on a bit of a spree.
BNPL is a much better option if you keep up with repayments. I ditched my credit cards in favour of Afterpay. Best thing I ever did.
Its mainly the invention of debit cards that has triggered the decline of the credit card. Many people prefer to use money they ''actually have'' in their accounts rather than live on credit. The debit credit enables this while still providing the convenience of being able to make on-line payments.
Add in the declining benefits to having a credit card, such as when airpoints got changed to airpoints dollars and the rate of accumulation dropped markedly for what you'd get with the same level of spending.
Cash is king!
No the one-eyed man is King
in the land of the blind
A credit card can be worthwhile if you avoid using it at retailers that surcharge and pay it off each month so no interest charges are incurred.
Gas stations, hardware, supermarkets, bottle stores etc. don't usually surcharge and the hotpoints/airpoints earned can pay for a monthly treat
When travelling some hotels, rental cars etc will want full payment upfront if you offer a debit card. In fact some years ago there were hotels that wouldn’t accept a debit card full stop.
Yep and overseas rental car hire paid with a credit card will include insurance so you don't need to pay the excess up front at the counter
Uptake might improve if the service improved: extortionate interest rates, endless charges and poor currency exchange rates make Credit Cards ever more unattractive in a world that includes competing services like Wise.
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