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Cameron Bagrie: Independent economist on Kiwis relying more on credit cards · Early Edition with Ryan Bridge

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  Speaker 1: More of us are relying on our credit cards to
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  Speaker 1: pay for stuff as the cost of living pressures bite.
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  Speaker 1: Kiwibank data shows credit cards accounted for a record 71.1%
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  Speaker 1: of card spending in August. That's the highest since records
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  Speaker 1: began in 2002. Debit cards, almost 30%. Cameron Bagri, independent
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  Speaker 1: economist with me this morning. Cameron, good morning.
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  Speaker 2: Good morning.
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  Speaker 1: What is this telling you?
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  Speaker 2: Well, we certainly like to use the cards. That's just,
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  Speaker 2: you know, we've become increasingly a cashless society. and credit
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  Speaker 2: cards are a pretty big component to that. So if
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  Speaker 2: you look at the general data across New Zealand, we
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  Speaker 2: spent $ 9. 4 billion on cards in the month of August,
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  Speaker 2: credit cards were 70% of that. If I have a
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  Speaker 2: look at how we're using our credit cards in general,
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  Speaker 2: are we seeing credit card utilisation or growth in credit
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  Speaker 2: card billings go up in excess of economic growth? The
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  Speaker 2: answer is no. In fact, you know, we're starting to
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  Speaker 2: see credit card utilisation diminish. We're actually putting a little
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  Speaker 2: bit less on the plastic, but it's still a pretty
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  Speaker 2: big component of spending out there.
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  Speaker 1: And just because you put something on a credit card,
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  Speaker 1: it doesn't mean you're in financial stress.
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  Speaker 2: No, it's the modern society. The big number I keep
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  Speaker 2: an eye on with credit cards is whether we're actually
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  Speaker 2: paying the numbers off each month, and unfortunately we don't. Typically,
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  Speaker 2: we'll put... about $ 4 or $ 5 billion on the credit card.
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  Speaker 2: If you look at your outstanding numbers on credit cards
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  Speaker 2: every month, that's typically around $ 6 billion. So what that
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  Speaker 2: means is that there's typically a couple of billion dollars
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  Speaker 2: that's not paid off your credit card every month. And
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  Speaker 2: of course, everybody knows that your interest rate on a
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  Speaker 2: credit card is around 20%. So you multiply a couple
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  Speaker 2: of billion by 20%, and guess what? That's a pretty
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  Speaker 2: big number that's gone straight to the banking sector.
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  Speaker 1: Just spending, consumer spending generally, when do you think it's
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  Speaker 1: going to bounce back to a more rosy level?
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  Speaker 2: Well, if you look at spending in general, so if
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  Speaker 2: you look at retail sales, for instance, your retail sales
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  Speaker 2: volume of retail sales has been up six quarters in
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  Speaker 2: a row. So the recovery is underway. And by that number,
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  Speaker 2: I'm actually talking about core spending as opposed to the
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  Speaker 2: spending including energy or including fuel. So the recovery is underway.
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  Speaker 2: The problem is, We're nowhere near the giddy highs of
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  Speaker 2: where we were in 2022 in regard to spending per hit.
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  Speaker 2: And what we're seeing at the moment is that as
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  Speaker 2: your rates bill, as your electricity bill eats up disposable income, well,
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  Speaker 2: guess what? You've got to reallocate, i.e. take money away
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  Speaker 2: from other areas of retail spend. There's a big structural
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  Speaker 2: shift that's going on. We're still spending. but we're spending
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  Speaker 2: in different areas because there's certain necessary items that are
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  Speaker 2: going a long way up in price, and that's siphoning
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  Speaker 2: core money away from the retail sector, and that's a
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  Speaker 2: structural shift.
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  Speaker 1: Cameron Bagri, independent economist, always good to chat.
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  Speaker 2: For more from Early Edition with Ryan Bridge, listen live
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• 3:01
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