Citi’s credit card index for May shows that spend on credit cards continues to increase year on year, with card applications on the rise.
Spend on credit cards has increased 30 percent year on year, with May marking the fourth consecutive month of spending at pre-pandemic levels, according to a Citi report.
The report further shows that more Australians are signing up for cards too, with a 25.5 percent increase in new card applications compared to this time last year.
At the start of the pandemic, many Australians pre-emptively canceled their cards as they feared that their economic circumstances would drastically decline, said Choong Yu Lum, head of cards and loans at Citi Australia.
However, he added, the nation weathered the pandemic better than expected, and the credit card sector has been on a path to recovery since.
Wallet pay continues to grow in popularity as consumers embrace contactless payment methods.
Looking at all Citi customers, the bank has seen a massive 287 percent surge in the use of wallet pay comparing May this year to May last year.
The increase has been particularly sharp amongst affluent customers which are up 400 percent and Gen Y customers which jumped 286 percent.
“On a global scale, Australians were early adopters of ‘tap and pay’ This meant when we were given the ability to use wallet pay and spend via our phone or smartwatch - many were slow to make the shift as the difference in effort between tapping your card or device was minimal,” he said.
“With the COVID-related focus on hygiene, we’ve seen Australians keep their physical wallet at home and slowly increase their use of wallet pay.
The lockdown pinch
Lum noted that Victoria’s current covid lockdown is dampening spend, even though the broader Australian economy looks strong.
The index showed weekly average spending in Victoria dropped 2 percent between the 21st of May and the 28th of May when the lockdown was first introduced, and then a further 12 percent between 28 May and 4 June, a full week of lockdown.
“Looking forward, if past lockdowns are a good indication of consumer behaviour, then we can expect spend to recover quickly when restrictions are lifted,” he added.
In terms of spend categories, airline and hotel spend remains low year on year, Citi anticipates this will pick up next month as Australian families gear up for school holidays again.
“When school holidays approach, we typically see a peak in spend on categories like travel and leisure. Even with the Melbourne lockdown in place, I expect we’ll see these spend categories surge as consumers head to the snow or for a domestic getaway,” the card specialist concluded.