There is a dark cloud on Australia’s sunny horizon. While the Western World learns the hard way to scrimp and save, Australians feel like they have dodged a bullet. And as such they can keep spending. The problem is many can’t afford it.
The latest Dun & Bradstreet Consumer Credit Expectations Survey shines a light on savings and credit usage in the September 2010 quarter.
It shows that despite facing cash difficulties significant numbers of families with children and younger Australians intend to apply for new credit accounts in the coming months. One in three younger Australians (18 to 34) intend to make an application for a new credit account. And one in three (28%) families with children at home intends to apply for a new credit account during the September quarter.
The Reserve Bank’s figures also show the average balances of credit cards has ended higher in recent months.
Both these groups say that moves by the Reserve Bank to further increase rates will have a negative impact on household finances.
So how is that they intend to take on more debt, knowing that interest rates are on the up and quite cognisant of the fact that it will hurt them. As Christine Christian, D&B’s CEO notes, the lucky country has not learnt the lessons that others have been forced to swallow.
Need any more proof? Both groups indicated that they intended to make a major purchase in the September quarter. Four in 10 people (41%) aged 18 to 34 intend to make a significant purchase.
And 36% of families with children will also make a major purchase. Now that of course is great news for retailers who should be looking at these figures with glee. But watch out for the sting in the tail. The message will have to hit home at some stage if interest rates keep rising.
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