High bank fees, car costs and mortgages are cutting deeper into family budgets, with less left over for travel and kids’ entertainment compared to last year, new data shows.
The Pocketbook Consumer Spending Series Report, which looks at the spending of almost 20,000 consumers, reveals more Australians are struggling to find spare cash for discretionary spending, and are directing their money to banks.
Pocketbook co-founder Bosco Tan said Australians were spending on average 90c per day on bank fees, with 25 per cent of total spending on mortgage or rental payments.
“Rising property prices mean Australians are spending more than ever on mortgage and rent payments which indicates a rise in the number of distressed mortgages,” Mr Tan said.
“Bank fees and car costs are also hitting the family purse hard, leading households to cut back on travel, home furnishings and kids entertainment. This is particularly concerning with recent discussion of minimum wage reviews by the Federal Government.”
ANZ hit by fee action
The Pocketbook report follows a successful class action against ANZ over its late fees, with customers recouping $57 million.
While the late fees were ruled “extravagant”, other fees including honour and dishonour fees, and over-limit fees on credit cards, were ruled reasonable.
Users of Pocketbook, which is a free service to manage spending, and aggregates data from bank accounts, credit cards and loans, spend an average of $20.88 on bank account maintenance, $28.15 on interest and cash advances and $11.03 on penalty fees.
The households surveyed also spent less than one per cent of income on kids’ entertainment, down from three per cent over Christmas. Travel also dropped from 10 per cent to six per cent. Online and offline spending overall dropped by 40 per cent following the Christmas period.
About 31 per cent of Pocketbook users spent more on discretionary expenses than they earned – down from 60 per cent in December. Unsurprisingly this coincided with a rise in people paying off their credit cards after Christmas, making $75 more on average in repayments than in December.
The top online retailers were Apple, Amazon and eBay, while offline it was Bunnings, Myer and BigW.
The latest ABS retail figures showed a rise in spending in December of 0.5 per cent. The data showed that while food and department store spending rose, but spending on clothing, footwear and personal accessory retailing and household goods was down.
The Pocketbook report revealed most consumers, 46 per cent, shopped at Woolworths in January, while 43 per cent shopped at Coles, and 9 per cent at IGA.
The ABS statistics revealed a rise in food spending in December of 0.6 per cent, a seasonally adjusted rise of 2.5 per cent.
Also this week, Woolworths’ reported an increase in sales of six per cent over its whole business, which included groceries and petrol, over the last half of 2013.
In its food and liquor divisions posted 4.8 per cent growth in the last half of the year compared to the same period in 2012, pulling in $21.5 billion.
As for next month, Pocketbook says Valentine’s Day will see a 1100 per cent spike in flower purchases, with an average spend of $67, a 200 per cent increase in jewellery buys and a 50 per cent increase in restaurant spending.