While Australia’s national debt has increased by 40% as Governments are spending big to combat COVID, the average person is doing the opposite. 800,000 credit cards have been cancelled and more than $7 billion of credit card debt has been paid off. In the month of September, there were 9 million fewer credit card transactions than in January, and 70,000 accounts were closed in August alone.

One interpretation is that Australians have been saving during the pandemic, and when they do buy, they aren’t going into debt to pay for it.

Another possibility is that Australians are giving up on credit cards and pursuing cheaper, alternative ‘buy now, pay later’ solutions, such as Afterpay. Afterpay’s annual report for the 2019-2020 financial year states the firm’s sales are up 112%, active customers are up 116%, and their income is up 103%— results which have seen their stock price nearly triple this year.

The tax cuts announced in the October federal budget are intended to encourage spending and stimulate the economy once they come into effect. But Australians’ prudent saving habits so far suggest that paying down debt will be a more common approach, rather than a spending spree.

It’s hard to fault people for being fiscally responsible during a recession, but tight wallets will undeniably have effects on the wider economy.