Australian Credit Card Industry Survey 2014

Creditcard.com.au has completed its second Australian Credit Landscape Survey to take the pulse of the just how people were coping with living in the everyday world of credit.

The survey idea was to get a more accurate awareness of the status and behaviour patterns of credit card holders. Just how much time or effort they applied to understand not only which type of different credit card features best suited them, but also the issue of debt management and the darker risk of credit card fraud.

The landscape of the credit card industry has changed significantly since the 2013 Australian Credit Card Industry Survey was conducted. Most significantly this year’s survey was conducted against a background of uncertainty and confusion caused by the widespread predictions and commentary about how tough the Budget of 13 May would be.

This unsettled scenario was accompanied by a number of changed factors that were impacting the landscape 12 months on from the 2013 survey.

• New requirements for credit card statements,
• The revision of privacy laws,
• Wider acceptance of contactless payment technology,
• An increase in the cost of credit card fraud,
• Widespread coverage of Australian personal debt levels; and
• Various technological advances (i.e. new mobile banking app features)

As these conditions directly influence the way consumers view and use credit cards. Creditcard.com.au believes it is important to make sure data is frequently collected and reviewed. The 2014 survey deliberately covered a broad canvas, with 42 questions covering the complex credit landscape. We appreciate the 1,588 Australians who gave us their frank answers.

Survey Demographics

The majority of survey respondents for our 2014 survey were female (70%). The state-by-state representation is similar to that of the 2013 survey and correlates to the latest data from the Australian Bureau of Statistics. In terms of age, the biggest difference was a 7% increase in the number of respondents 55 and over when compared to the 2013 survey.

Work Industry	Grand Total
Homemaker	17.73%
Professional Services	6.5%
Education	6.94%
Medicine	5.43%
Engineering/Mining/Construction	3.72%
Trades & Services	5.8%
Media/Entertainment	1.32%
Marketing	1.51%
IT	3.15%
Retail	7.63%
Admin	6.56%
Government	6.06%
Other	27.63%
Grand Total	100%

 
A significant proportion of people said they had “Other” occupations (27.63%) – a result skewed by the large number of respondents who are “Unemployed” (29.21%), as all respondents answered this particular question.

Income	Grand Total
Less than $15,000	15.09%
$15,000 to $30,000	18.89%
$30,000 to $45,000	14.56%
$45,000 to $60,000	12.55%
$60,000 to $75,000	10.31%
$75,000 to $100,000	8.36%
More than $150,000	1.05%
Rather not say	15.16%

Which bank is the most popular?

Three of Australia’s Big Four banks enjoyed a surge in growth and popularity among credit seekers at the expense of hyper-active HSBC and Citi.

Year on year growth was as follows: Commonwealth Bank + 38%; Westpac + 38%; NAB + 25%. ANZ recorded a comparatively listless + 8%.

In stark contrast the year on year decline for HSBC was minus 50% and for Citi minus 25%.

Both HSBC and Citi recorded strong negative reaction because of the level of the unwanted calls targeted at potential credit customers.

Bank popularity by age

The breakdown of bank popularity, however, reveals the following three age groups favour other financial institutions:

• 26-34 year olds put GE Money at the top of their list, closely followed by Bankwest,
• 45-54 year olds prefer Citi and Coles,
• Respondents 55+ have more American Express cards than any other group. They also top the list of Bankwest and Westpac customers in the breakdown below.

Customer Debt by Bank

Citi customers had the most overall debt, a result influenced by the ability for customers to transfer balances and consolidate loans. Citi also has a large proportion of customers with high limit credit cards.

The Commonwealth Bank had the most customers with under $1,000 in debt, correlating to its younger customer base (as shown above).

Customer income by bank

The Commonwealth Bank had the most respondents with income of less than $15,000, followed by NAB and St George. The graph below also shows:

• The majority of GE, St George and CBA customers were all $15,000 to $30,000 income earners, with GE the most popular among this income bracket.
• Citi was the top choice for people earning between $45,000 and $100,000, with these demographics making up 56% of all customers.
• The biggest proportion of HSBC and Amex customers were respondents earning between $75,000 and $100,000.Bankwest had the most customers in the $100,000 to $150,000 income bracket, while Amex, HSBC and ANZ were the favourites for people earning over $150,000.
  

  Do you receive unwanted calls from your bank?

  The biggest offenders were Citi and HSBC when it came to unwanted phone calls. More than a third of respondents complained about both organisations. In contrast, just 5% of respondents said they had received unwanted calls from Bendigo Bank.

  

  Reasons for getting a Credit Card

  How many credit cards do you own?

  The majority of respondents (67%) had just one credit card. While the results below are fairly similar to the 2013 survey data, a 7% increase in people with just one card and a 6% decrease in those with three cards in 2014 was an indication that people have cut down on the number of credit cards they own in the time between surveys.

  

  Considering the data by age group revealed older respondents were overall more likely to have multiple credit cards, compared to only 9% of people under 25 had more than one card.

  

  Comparing the number of cards owned with the amount of debt confirmed that people with more than one credit card also have more debt. This result is consistent with the data from 2013.

  

  People with one credit card made up the biggest proportion of debt worth $8,000 or less due to the high percentage of respondents with just one credit card. But 45% of all people with balances of $8,001 – $10,000 owned two cards and 75% of all people with debt of more than $10,000 also had more than one card.

  Reason for getting a credit card

  Convenience is the most common reason people gave for getting a credit card, followed by online shopping. More than half of all respondents (56%) cited one of these two options as their main reason for getting a credit card.

  

  Emergency use was the third most common reason to get a credit card. A total of 22% of respondents gave this reason in the 2014 survey – up from just 10% in 2013, indicating people are now more selective with how and when they use credit cards.

  But 19% of all respondents said that they took a card because their bank offered it to them, up from 12% in 2013. A closer look at these respondents revealed that 27% of them had debt of $5,000 or more – which is above the recorded national average of $4,428 in May 2013 – while most (64%) had balances of $3,000 or less.

  

  The above results show a vast improvement on the 2013 Credit Card Industry Survey, where 42% of people who took a card offered by their bank had debt of over $5000.

  What do you use your card for most often?

  

  Most Expensive Purchase

  Results for the most expensive purchase are typically varied, and the 2014 survey data brought as many interesting answers as the previous year’s results. Answers to this question ranged from a MIG welder and plumbing repairs to a car, study fees and a Chanel bag.

  

  As we found in the 2013 survey, a holiday was the most popular answer and approximately 32% of respondents said their most indulgent expense was travel-related. Other common responses included paying for entertainment tickets, furniture, clothes and weddings.

  Customer Behaviour

  When did you last compare your credit card?

  Financial experts often recommend credit card comparisons as a way for customers to find better ongoing interest rates and competitive balance transfer offers. This recommendation is supported by the survey data for 2014: people who got a credit card for a balance transfer were the most likely to have compared cards within the previous three months. In comparison, those who took a card offered to them by their bank were more likely to have never compared cards.

  

  How often do you check your card balance?

  The graph below shows that people who check their balances monthly were more likely to have higher outstanding balances. One reason given for this trend is that people with higher balances will be aware of the amount owed and check their account less as a result.

  

  Almost half of all respondents (42%) said they look at their accounts on a weekly basis – a vast improvement on results from the 2013 survey.

  Making the minimum repayments

  Overall, 53% of all respondents said they always make the minimum repayment, 28% said they were not able to meet repayments and the remainder got there “most of the time”.

  

  Credit Limits

  The number of respondents with credit limits of less than $1000 increased 10% between 2013 and 2014. In contrast, the number of people with limits of $30,000 or more decreased from 10.52% in 2013 to just 5% in 2014.

  

  More than half of all respondents (55%) in 2014 had credit limits of less than $5000. This result demonstrates the ongoing impact of the government’s credit card reforms, which changed to the way credit limits are offered and approved. Since July 2012, customers have been able to nominate a credit limit on their application and credit providers have been banned from offering unsolicited credit limit increases. There has also been more information about credit limits and the effects they can have on debt and risk factors in that time.

  Credit Limit by age group

  

  Younger credit card holders have a much lower credit limit than other demographics, however, the following points reveal age is not an accurate indicator of credit limit for every demographic:

  • People 26-34, 45-54 and 55 or older were most likely to have a limit of $1000-$5000
  • 51% of those in the 35-44 age range had limits between $500 and $5000.
  • The highest percentage of people with limits of $20,000 to more than $30,000 were aged 55 or above. 34% of these respondents had limits of $10,000 or more.

  Credit Limit by debt level

  The survey data for 2014 highlighted a close relationship between the amount of debt respondents had and their credit limit. The concern with this trend is that higher limits lead to bigger balances that are harder to pay off – although it is unclear whether the limit or the debt comes first.

  

  Exceeded Credit Limit

  A total of 29% of respondents said they had exceeded their credit limit once or more. Of the people who went over their credit limits, only 9% increased their credit limit – despite the fees that many issuers still charge for overdrawn accounts opened prior to the credit card reforms implemented in June 2012.

  

  The 35 to 44 year age group exceeded their credit limit the most, and the data shows that just over half of this age group also have fairly conservative credit limits between $500 and $5000.

  Debt Level by age group

  Respondents aged between 45-54 have the most overall debt and are the age group with the highest amount of credit card debt between $8,001-$10,000 and over $10,000.

  

  This trend emphasises the concerned raised by a growing body of research indicating people aged 50 and over have more debt than superannuation. In contrast, people under 25 had the most conservative credit card debt levels.

  How often do you pay off the monthly balance?

  
  Just under 42% of survey respondents said they always pay off their balance. More than half of all people 55 and over, as well as those 25 and under, chose to do so. On average, middle-aged respondents were the worst at paying off their balance monthly.

  Balance Transfer Awareness

  Awareness of balance transfers products and an understanding of how they work is essential to get the most out of these kinds of cards. CreditCard.com.au visitors often ask questions about balance transfers, indicating a division between the number of people who are familiar with this option and those that are overlooking it or do not understand balance transfers.
  The majority of survey respondents (70%) said they were aware of balance transfer credit cards and how they work. This result, however, changed significantly when age was considered.

  

  People 26-44 and in the 55+ age groups were more likely to be aware of balance transfers, while young people (18-25) were the least aware of these credit cards. People aged 45-54 were the only other demographic with more than 30% of respondents unaware of balance transfers.

  Balance transfer awareness by yearly income

  

  People in the lower income brackets were less likely to be aware of balance transfer credit cards, while those earning between $75,000 and $100,000 were the most aware.

  Number of balance transfers completed grouped by credit card debt

  

  These results reveal that people with higher levels of credit card debt are also more likely to know about balance transfer options with credit cards. In saying this, however, 26% of people with a credit card debt of over $10,000 had never performed a balance transfer. There are still plenty of people that could save money by performing a balance transfer, and for more information we recommend checking out our guide to the best balance transfer cards of 2014.

  Interest Free Days Awareness

  Young people were the most likely to be aware of interest free days, with respondents aged 18-25 at least 10% more aware than other age groups.
  
  

  People with credit limits of $1000 or less and those with limits between $5,001 and $10,000 were the least likely to know about interest free days and are not taking advantage of this convenient feature.

  Purchase Rate Awareness

  
  Although 63% of all respondents said they were aware of their purchase rate, that means 37% of people do not know how much they pay in interest – or how much they could save with a different card.

  Purchase rate awareness split by debt level

  
  This graph shows that people with more debt are generally more aware of their purchase rate, and those with less than $1,000 and between $1,000-$3,000 in debt were the least likely to be aware of how much interest is charged.

  Purchase Rate Awareness vs Last Time Compared

  
  The trend highlighted by the above graph is that the more often people compare credit cards, the more they are likely to know their purchase rate. Respondents who never compared credit cards were the group with the least awareness of their purchase rate.

  Do you check your credit card statements?

  The majority of respondents checked their credit card statements – only 13% of respondents said they did not look at statements.

  

  Credit Card Technology Usage

  When given the choice between using a credit card and paying with a mobile phone, most respondents (67%) preferred cards. Looking at the data by age shows that younger people were the most open to using a mobile phone for payments and people were less likely to do so as they get older.

  

  The majority of people said they use internet banking, although 30% of those aged 55 and over said they do not use this service.

  

  Branch banking continues to play an important role for credit card customers, with the majority of people that chose not to use mobile banking paying in a branch (42%).

  

  People were split 50/50 about using mobile banking apps, although it is again clear that younger people are the most open to this service. The two most common reasons respondents gave for not using a bank’s mobile app were; Security/Safety & No Smartphone.

  

  People were most likely to use contactless payment technology once or twice a week, with young people generally using it more than other age groups.
  Overall, the data collected from the survey shows that PayPass/PayWave was the second most preferred payment option following PIN.

  

  Both Visa and MasterCard have indicated that they expect contactless payment options to become more popular over time, as consumers continue to familiarise themselves with this option.
  The graph below breaks down preferred payment methods by age, revealing how different demographics are responding to changes in card technology.

  

  While PIN was the most popular option for people 35 and over, those under 35 favour PayPass and PayWave contactless payments slightly more than PIN payments, indicating the convenience of this technology and their openness to new payment methods has influenced how they use credit cards.

  Would users share on social media?

  People 55+ and those aged between 35-44 were the most open to sharing purchases on social media, but only 11% of all respondents said they would use this option if it was offered.
  

  Security & Fraud

  Credit card security and fraud frequently feature in the media and are major concerns for cardholders. Data from the Australian Payments Clearing Association for 2013 has revealed the cost of card fraud in 2013 increased by 1% to $280.5 million. With card-not-present (CNP) transactions and lost and stolen card fraud increasing by 5% and 33% respectively for the 2013 financial year, analysing consumer concerns is increasingly important.

  

  While handing a credit card over to shop staff or waiters is a common occurrence, 47% of respondents said they did not trust these people with the card details. When looking at the data by age, two things are apparent:

  1. Younger people are more trusting of staff; and
  2. Older people are less trusting, particularly those aged 45 and over.

  This result is in keeping with the data for previous questions, as well as in other research.

  

  The cautious nature of people over 45 does not extend to ATM and EFTPOS transactions, however, with these age groups the least likely to cover the keypad during a transaction. Overall, 54% of respondents said they always cover keypad when they enter their PIN, 36% sometimes covered the keypad and 10% said they never do so.
  In 2013 there was a 4% increase in counterfeit and skimming fraud in Australia, and according to the Australian Payments Clearing Association, that was primarily due to skimming at ATMs, which suggests more cardholders should take care to protect their PINs.

  

  A total of 29% of respondents said they had become a victim of credit card fraud, with older age groups more likely to face this issue. The most common incidents of fraud included:

  • Using a card overseas,
  • Online transactions; and
  • Stolen credit cards.

   
  These responses are backed up by the data provided by APCA, particularly when it comes to online transactions and stolen credit cards. Specifically, the APCA 2013 Fraud Statistics report said that a 5% increase in card-not present fraud in 2013 corresponded to a 14% increase in online shopping, while the development of more sophisticated fraud detection tools was leading other criminals to revert to “theft and simple deception to obtain cards”.

  Changes in the ways consumers use credit cards has a huge impact on the industry. Credit card issuers go to extreme lengths to design cards that meet changing consumer needs, which means the results that come from this kind of research are valuable for card companies and consumers alike. The trends highlighted in this report provide insights into the directions that consumers and credit card issuers take in 2014 and beyond.