Johannesburg - Although the worst of the recession is over, South Africans are still cautious about spending on their credit cards, which they used conservatively during the festive season, according to Standard Bank Group [JSE:SBK].
In a review of credit card use over recent months, Standard Bank, which is SA's largest issuer of credit cards, said on Friday that, although consumers were using their cards more, the turnaround in spend had been
"cautious and muted".
Leila Fourie, head of the credit card division at Standard Bank, said many consumers were taking the opportunities offered by lower interest rates to reduce outstanding balances and people were spending less on high-ticket items.
"In lower- and middle-income groups, consumer spending patterns were erratic during 2010. This changed from October with the bulk of transactions being recorded in department and clothing stores. Airline spend contracted during this latter part of the year," said Fourie.
Statistics from Standard Bank revealed that upper-income groups used their cards primarily in retail outlets ranging from department to jewellery stores and there was a contraction in travel and discretionary spend over the festive season.
"The number and type of transactions performed by credit cardholders indicates that there is indeed some growth taking place in the credit card arena. However, this growth is muted and below the recovery levels that had been anticipated earlier in 2010," added Fourie.
Year on year, transaction volumes have been climbing, fed primarily by several reductions in interest rates that have had a positive effect on consumers' disposable incomes and the average ticket value of purchases is growing slightly above inflation.
According to Standard Bank, the cautious return to credit card use can also be seen in consumers reducing their outstanding balances.
"There is no doubt that consumers have become more aware of their debt and ability to service commitments. Increasingly, they are using cash or debit cards to make monthly purchases," she said.
Consequently, fewer cardholders are defaulting on their obligations and the level of credit card bad debt is improving. Debt review, however, still remains an industry concern.
Fourie said Standard Bank's recent experience in the credit card arena could well be indicative of a broader national trend as the Consumer Financial Vulnerability Index also indicated that consumers were generally still financially vulnerable in spite of some improvement in economic conditions.
In a review of credit card use over recent months, Standard Bank, which is SA's largest issuer of credit cards, said on Friday that, although consumers were using their cards more, the turnaround in spend had been
"cautious and muted".
Leila Fourie, head of the credit card division at Standard Bank, said many consumers were taking the opportunities offered by lower interest rates to reduce outstanding balances and people were spending less on high-ticket items.
"In lower- and middle-income groups, consumer spending patterns were erratic during 2010. This changed from October with the bulk of transactions being recorded in department and clothing stores. Airline spend contracted during this latter part of the year," said Fourie.
Statistics from Standard Bank revealed that upper-income groups used their cards primarily in retail outlets ranging from department to jewellery stores and there was a contraction in travel and discretionary spend over the festive season.
"The number and type of transactions performed by credit cardholders indicates that there is indeed some growth taking place in the credit card arena. However, this growth is muted and below the recovery levels that had been anticipated earlier in 2010," added Fourie.
Year on year, transaction volumes have been climbing, fed primarily by several reductions in interest rates that have had a positive effect on consumers' disposable incomes and the average ticket value of purchases is growing slightly above inflation.
According to Standard Bank, the cautious return to credit card use can also be seen in consumers reducing their outstanding balances.
"There is no doubt that consumers have become more aware of their debt and ability to service commitments. Increasingly, they are using cash or debit cards to make monthly purchases," she said.
Consequently, fewer cardholders are defaulting on their obligations and the level of credit card bad debt is improving. Debt review, however, still remains an industry concern.
Fourie said Standard Bank's recent experience in the credit card arena could well be indicative of a broader national trend as the Consumer Financial Vulnerability Index also indicated that consumers were generally still financially vulnerable in spite of some improvement in economic conditions.