?Zero-Interest? Credit Cards Drive Record Numbers Of Card Applications

Australians applied for a record 959,894 credit cards in the January to March quarter, a 26.9 per cent increase on the previous year, according to the Baycorp Advantage Quarterly Credit Demand Index.

Baycorp Advantage Managing Director Andrew Want said continued competition among ?zero-interest? credit cards saw 200,000 more applications than the same quarter last year, the largest number of applications on record for a single quarter.

The previous record number of applications was in the second quarter last year, when several credit providers launched ?zero-interest? cards, which offer no interest for a set period on a balance transferred from another credit card.

Australia?s appetite for credit also saw a record number of personal loan applications, with 692,686 applications in the quarter, a seven per cent increase on the January to March quarter in 2005. Personal loans include store credit.

Total unsecured credit demand, for both personal loans and credit cards, grew by 17.9 per cent over the March quarter in 2005, with a total of 1,652,580 applications, an increase of 250,659 applications.

Mr Want said increasingly competitive credit card products were now offering an unprecedented amount of choice for consumers and personal loans appeared to be headed in the same direction.

?We are still seeing robust activity in the personal credit market despite softer consumer credit growth overall,? Mr Want said.

?The range of credit products now available, including new credit card products last year which offered zero interest on balance transfers, gives consumers a real choice about the fees and services they want from a credit card.

?Baycorp Advantage?s Credit Demand Index supports the evidence that consumers are exercising power of choice.?

The Baycorp Advantage Credit Demand Index provides a measure of the market for unsecured discretionary consumer credit products ? credit cards and personal loans, in Australia. The Index does not measure residential mortgages, which form a significant proportion of total credit applications, or credit applications for utilities and telecommunications companies.

The data is sourced from Baycorp Advantage?s Australian consumer credit bureau information. Baycorp Advantage, which is the custodian of credit files for almost 14 million Australians, facilitates credit reference checks for Australia?s major banks and lenders. The vast majority of applications for consumer credit are checked against Baycorp Advantage?s data.

The Index revealed credit card applications grew by 6.4 per cent, or 57,491 applications, over the December quarter. Personal loan applications grew by 5.5 per cent, or 36,108 applications, over the December quarter.

Mr Want said the figures indicated consumers were continuing to shop around and shift their existing credit card balance to new cards offering lower interest or higher benefits.

?Consumers need to remain cautious to ensure they can meet repayments on a new card,? he said.

?When the zero-interest honeymoon period ends and interest payments start, the impact on personal cash-flows can be very rapid and very significant.?

?Even with a good credit history in the past, if consumers default on repayments this will cause problems accessing credit they may need in the future.?

Mr Want said anyone making an application for credit should obtain a free copy of their credit history file from Baycorp Advantage.

?We encourage people to check to ensure the information on their file is accurate before they apply for credit,? he said.

?As a matter of good financial housekeeping, people should check their credit files at least once a year regardless of whether they are thinking of making a credit application.?

Consumers can apply for a copy of their credit file at www.mycreditfile.com.au or by calling 1300 762 207.

A $27 express delivery service fee is payable if the file is needed urgently, or otherwise the file will be available within 10 days.