In 2013 the team at creditcard.com.au conducted a survey to find out more about our visitors experiences and understanding of how credit cards work. We continuously receive questions every day and wanted to learn more about our customers understanding of the fine details.
Credit itself is a delicate device and in order to use it effectively the user must understand exactly how everything works – factors like interest rates and interest free days have a major part to play in good money management.
We know some of our visitors are credit card newbies while some are very experienced with them, so we tried to learn more about them all.
The survey consisted of 45 questions and took around 10-15 minutes to complete.
We explored a number of categories including the below;
- Personal card habits – which cards and for what purpose
- Usage patterns
- Debt levels and credit limits
- Understanding of key terms and jargon
- Technology – usage and perception
So lets get into it..
The survey was completed by approximately 2,100 respondents, the majority of the survey respondents were women with 63%. Women have been said to be the budget managers of a family or household, we assume this is why more women than men were visiting our credit card comparison site.
This was spread relatively evenly across the age groups – with slightly fewer respondents in the 55 and over category. This was also reflected in the occupation summary below.
Industry Worked in
The industry summary reflects a broad population mix from all over the country. The representation by state roughly coincides with the breakdown reported by the Australian Bureau of Statistics – the proportion of respondents from NSW, Queensland and Western Australia was slightly more than the general spread of population across those states.
|Trades & Services
Which bank is the most popular?
40% of the respondents had more than 1 credit card. As we can clearly see, respondents had the most cards with Commbank, (14% overall) followed by ANZ, (13%) NAB and Westpac (around 9% each) – the ‘big 4’ Australian banks made up 46% of the total.
Following those closely were American Express, Citibank and St.George, then HSBC and Bankwest. Interestingly American Express and Citibank had more male card holders while Commbank and NAB more women.
73% of all of the respondent’s credit cards came from 9 issuers. CBA had the clearest proportion of young card holders, while Westpac had the oldest.
Of the rest of the big 4, NAB had the smallest variance of age groups among the holders. HSBC and St George card holders were also quite evenly spread across the age brackets.
Reasons for getting a Credit Card
Online shopping and convenience specifically were the most common reasons for choosing a credit card, at 18% and 17% respectively. 10% of respondents proved sensible, reporting their card was for emergency use only.
Interestingly 12% of respondents took a card as it was offered to them by their bank (we wonder if they even bothered researching the market?). Looking more closely at those particular respondents revealed that 42% of them overall had $5,000 or more of credit card debt (above the national average of $4,498), and 26% had more than $10,000 worth of debt.
Day to Day Usage
After establishing the intentions of why people acquired credit cards we then asked about what they were actually being used for. Again online shopping was the most popular, closely followed by paying bills and buying groceries.
Only 3% of usage was for a cash withdrawal which was good to hear – 99% of credit cards offer no interest free days on cash withdrawals.
Most Expensive Purchase
There was a huge variety of answers when asked what ‘the most expensive purchase on your credit card was’. Answers ranged from ‘cattle yards” (the fenced in enclosures for cattle), to tickets for a Kiss concert, a Kardashian handbag, through to a luxury hotel stay in Singapore and veterinary bills by more than one person. A holiday was the overall most popular answer.
Who has the most credit cards?
Generally the older the respondent, the more credit cards they were likely to have. 60% of respondents had just one credit card, 23% two cards, 13% had three cards and just 4% had 4 cards or more. The gender split showed that 49% of men had more than one card compared to only 36% of women.
Number of cards vs amount of debt
This graph is self-explanatory, the survey found that the amount of debt an individual has is likely to increase with the number of credit cards they own.
How often do you check your statement?
The data indicates that those checking their statement monthly overall had higher outstanding balances. One theory offered for this pattern was that the bigger balance your card is holding, the more likely you are to be aware of it, and less likely to be inclined to check it regularly.
We hope not to ignore the likely problem of mounting interest.
Making Minimum Repayments
Whether their credit card debt was small or large, an average of 55% of all respondents said they always made the minimum card repayment. 23% of respondents said they did not make the minimum repayments, however only 1 in 4 of those had an outstanding balance of $5,000 or more.
Debt level vs. age group
Worryingly 8% of 18-25 year olds have a credit card debt of $5,000 – $10,000. The 35-54 year old age groups had the highest level of debt, with 18% having a credit card debt of more than $10,000. As the credit limit information showed, 1 in 5 of those over 35 years old had a credit limit of $20,000 or more.
Paying off the monthly balance
An average of 50% of both the youngest and oldest age groups claimed to always pay off their balance each month.
The 18-25 year old age group were the most responsible with only 6% saying they would never pay off the balance.
Only 1/3 of those in the 35 – 54 age bracket said they always paid off their balance each month, while almost 1/4 of them said they never paid it.
Outstanding debt vs. balance transfers completed
A very clear correlation was found – 55% of those who had made two balance transfers or more had outstanding debts of more than $10,000. Two thirds of balance transfer customers had $3,000 or more of debt.
Understanding Interest Free Days
Interest free days on credit cards are very important to understand as they can mean learning how to avoid paying any interest at all. Worryingly, 25% of all our respondents didn’t know how they work. We’ve therefore put a guide together to try and help people learn about this topic.
The oldest respondents seemed the most savvy with around 80% of 35 year olds and older professing to know how interest free days worked compared to 58% in the youngest age bracket of 18-25 year olds. There does seem to be a gap and a need for increased awareness of the key term – perhaps ASIC should make the banks provide a guide when issuing new cards?
The below graph seems to suggest that the more credit that people have access to, the more savvy they seem to be about how interest free days work. Following on from above, this is likely to be because older people tended to have higher credit limits.
Purchase Rate Awareness vs. Debt Level
We were interested to see if people actually knew what the interest rate on their card was. Obviously a lower rate would seem more desirable if having to pay interest.
We wondered if those with debt were doing their best to at least pay less interest. The graph shows that the rate awareness was highest in the group carrying the most debt.
Unsurprisingly those who had compared cards recently were more likely to know their purchase rate. 50% of respondents who had never compared cards before knew their interest rate – something that their bank could be benefiting from if they are paying interest charges with a high rate. Comparing products online is obviously a great way to check you’re getting the best rate possible.
Technology – internet and mobile
We tried to find out if people were willing to adopt new technology – using their mobile phone to pay for things and not having to carry a card. More men than women were willing to use the phone – 46% of men vs. 34% of women.
Looking at age brackets, younger people were more willing to pay using their phone than older people. Over 50% of 18-34 year olds said they would be willing to try, compared to just over 20% of those aged 45 or older.
Younger people were also much more likely to use banking apps than older people. As above, this is also likely to be because smart phones and tablets are still more popular with younger people than their elders.
Sharing Purchases via Social Networks
Would you allow your purchases to be shared automatically on social media in exchange for rewards or special offers?
Age is not a factor when it comes to sharing purchases socially, even in exchange for special offers and rewards.
Will this trend change in the future?