APPLICATIONS for new credit cards have fallen for the fourth quarter
in a row as shoppers fear further interest rate hikes, a business
information
group says.
Consumers are instead choosing personal loans, including store finance
with interest-free periods, in much greater numbers, the Veda Advantage
credit research concludes.
Credit card applications fell 7.3 per cent in the January to March 2007
quarter compared with the same quarter in 2006, down 70,498 applications
to 889,396, according to the Vega Advantage research.
The drop represents a 2.2 per cent decrease on the immediately preceding
October to December quarter.
*Credit surge ends *
It is the fourth quarter in a row that credit card applications have
fallen, down from the all-time high in the previous March quarter of
959,894 applications.
At the same time, personal loan applications rose 7.7 per cent to
745,753 in the January to March 2007 quarter, 53,067 more than in the
corresponding quarter of 2006.
That result is a 2.4 per cent increase on the immediately preceding
October to December quarter.
Veda Advantage’s information services general manager Erica Hughes
forecast the two-year surge in new credit has ended.
“This continuing slowdown in the rate of new credit card applications
appears to reflect that consumers are increasingly concerned over the
high interest rates attaching to the use of credit cards, and of the
threat of more interest rate rises,” Ms Hughes said.
Overall credit growth was still increasing, she said.
“However, more and more consumers are looking to more cost effective
credit products, such as personal loans, to finance their purchases.”
