Higher interest rates are slowing credit card use

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."Source: AAP