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New Zealanders' appetite for debt, using plastic may be returning, Veda says

Tuesday 18th October 2011

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New Zealanders may be regaining their appetite for debt and credit card spending, a development that could bode well for retailers during the crucial Christmas trading season.

Credit card inquiries rose 12.9 percent in the nine months ended Sept. 30 while hire purchase queries gained 3.2 percent, according to figures from Veda Advantage, the nation’s biggest credit check company. Mortgage inquiries rose 11 percent.

“It appears that people have been increasingly confident in their ability to manage debt,” John Roberts, Veda’s managing director, told BusinessDesk.

Consumers are still being careful not to over-extend themselves “after a rough few years” though the trend indicates “demand for credit will continue to increase,” he says.

New Zealanders remained upbeat in October, according to the ANZ-Roy Morgan Consumer Confidence survey released last week, though the measure dipped 0.3 points to 112.2 on a scale where 100 marks the neutral line pessimists and optimists.

A net 9 percent said they were worse off than a year ago, an improvement from the net 19% who felt worse off in last month’s survey.

According to Veda’s data, personal loans were the only category where inquiries fell, dropping 10%. Roberts said that may reflect debt consolidation products on offer from banks, such as revolving credit and fixed interest options on credit cards.

Rival credit check company Dun and Bradstreet said consumers will still dip into their savings for special occasions such as holiday expenses and the general mood is still of caution.

“People began to tighten their belts over the June quarter as they realised they would have trouble meeting their credit obligations leading into Christmas,” general manager John Scott said.

“It probably reflects the fact that many families, particularly lower income families, are still struggling to manage their debt levels,” Scott said.

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