KEY POINTS:
While New Zealanders' love affair with credit cards continues, signs are emerging that we're learning how to manage the plastic better.
Figures for December, due out at the end of the month, are likely to show that Kiwis spent around 9 per cent more on their credit cards during the annual Christmas shopping frenzy than they did in December 2006.
But while that may seem like a big jump, the rate of growth in spending on credit cards, and the growth in outstanding balances, are both slowing.
In addition, points out Melbourne-based consultant Mike Ebstein, the growth in outstanding balances is slower than the growth in spending.
In other words, New Zealanders are learning to pay their credit cards off.
Ebstein, of MWE Consulting, agreed there was an affection for plastic but said at the moment it was "a love affair with a happy ending".
"People are using their cards more, but you'd have to say New Zealanders as a whole are pretty level-headed and prudential in the way they manage their credit card debt."
Reserve Bank data shows that in November Kiwis spent $2.22 billion on credit cards, an annual increase of 9.6 per cent.
However in the first half of 2006, spending growth rates were often in double digits (up to 12.4 per cent in March 2006).
At the same time the rate of increase in the amount owed has also slowed. In November Kiwi credit card holders owed $5.016 billion - the first time the figure has tipped the $5 billion mark - an annual increase of 7.7 per cent. That is down from a two-year high of 9.2 per cent annual growth in May 2006.
Ebstein said around two-thirds of that outstanding balance would be attracting interest. Australians, he said, were less adept - across the Tasman interest was being paid on 72 per cent of outstanding credit card debt.
National Bank director of retail banking Craig Simms said credit card customers were also making the most of loyalty programmes, such as its cash-back scheme offering cardholders a cash rebate based on their annual spend.
Mastercard country manager Stuart McKinlay said the popularity of eftpos in this country had conditioned New Zealanders to using plastic. "New Zealand is one of the most cashless societies I know of."
But was less credit card debt bad for business? "If you've got a situation ... [as] in New Zealand at the moment, where you have good spend on credit cards and strong repayment of credit cards, and a low default rate on credit cards, that's a good market," he said.
Meanwhile, the concept of the debit card is gaining popularity. Westpac says its Debitplus card, launched a year ago, is the only one on the New Zealand market. The bank said since August it had been issuing three Debitplus cards to every two credit cards.
Debit cards offer a combination of eftpos and credit card. They only operate on available funds, but can be used overseas or to shop online in the same way a credit card can.
But budget advisers still see the other side of the story. Mangere Budgeting and Family Support Services only reopened this week after the holidays and is already booked solid until the end of February.
Chief executive Darryl Evans said while some clients were getting more sensible, "we're also seeing the people that have three, four credit cards or store cards, and they're pinching the money off Visa card this month to pay off the MasterCard".
