Kiwibank economists said the trend was revealing of how households were navigating the recovery.
“Households are still emerging from a period of intense cost-of-living pressure. The growing reliance on credit suggests that many consumers remain cash-strapped.
“Credit cards are no longer just another plastic card among countless others … they’re increasingly becoming the preferred way to fund day-to-day spending.”
While consumer confidence has improved, Kiwibank said the labour market remains soft, and climbing interest rates are not supporting spending.
“When real incomes were squeezed by high inflation in 2022-24, households ran down their savings. This led many Kiwis to turn to credit cards to help smooth out their spending.”
However, Kiwibank said the rise in credit card usage doesn’t signal stress on its own.
“But it is a trend worth watching. The recovery in spending is not yet underway. And a growing dependence on credit rather than debit, suggests that consumer confidence may be returning faster than cash buffers are rebuilding.”
The bank pointed to the possibility of some of the lift in credit card spending reflecting the attraction of rewards programmes, travel points and cashback offers.
Last week, Stats NZ said electronic card spending in retail industries fell 0.9% or $63 million in August, when compared with the previous month.
Spending dropped in all retail categories – including durables, hospitality, consumables and apparel – except fuel, which rose $6.4m or 1.3%.
Earlier this year, Kiwibank’s third annual State of Savings Index found 40% of Kiwis had turned to debt as a means of getting by, with buy now pay later the most common form to do so (19%), while 7% were increasing existing credit card limits.
Kiwibank chief executive Steve Jurkovich said economic conditions have been “pretty tough” with prolonged pressure on household budgets.
He said things like fuel costs, groceries, rates and insurance premiums “don’t have a lot of wiggle room” for people.
“All the things that people just have to pay [for], if they’re going to get by, have risen a lot.”
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