Kiwibank economists said the trend was revealing of how households were navigating the recovery.<\/p>\n
\u201cHouseholds are still emerging from a period of intense cost-of-living pressure. The growing reliance on credit suggests that many consumers remain cash-strapped.<\/p>\n
\u201cCredit cards are no longer just another plastic card among countless others \u2026 they\u2019re increasingly becoming the preferred way to fund day-to-day spending.\u201d<\/p>\n
While consumer confidence has improved, Kiwibank said the labour market remains soft, and climbing interest rates are not supporting spending.<\/p>\n
\u201cWhen 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.\u201d<\/p>\n
However, Kiwibank said the rise in credit card usage doesn\u2019t signal stress on its own.<\/p>\n
\u201cBut 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.\u201d<\/p>\n
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.<\/p>\n
Last week, Stats NZ said electronic card spending in retail industries fell 0.9% or $63 million in August<\/a>, when compared with the previous month.<\/p>\n Spending dropped in all retail categories \u2013 including durables, hospitality, consumables and apparel \u2013 except fuel, which rose $6.4m or 1.3%.<\/p>\n Earlier this year, Kiwibank\u2019s third annual State of Savings Index found 40% of Kiwis had turned to debt<\/a> 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.<\/p>\n Kiwibank chief executive Steve Jurkovich said economic conditions have been \u201cpretty tough\u201d with prolonged pressure on household budgets.<\/p>\n He said things like fuel costs, groceries, rates and insurance premiums \u201cdon\u2019t have a lot of wiggle room\u201d for people.<\/p>\n \u201cAll the things that people just have to pay [for], if they\u2019re going to get by, have risen a lot.\u201d<\/p>\n