* Australian credit card debt falls 3.2% to A$22.5 bln in July
* Drop of 21.2% for the year to July is steepest on record
* Bank earnings under pressure as a result - analysts
SINGAPORE, Sept 7 (Reuters) - Australians' credit card debts fell to a 15-year low in July, data showed on Monday, as the pandemic drives a global surge in repayments that analysts say will hurt banks at a time when consumers are also reining in their spending.
Reserve Bank of Australia figures showed total interest-incurring credit card balances fell 3.2% month-on-month to A$22.5 billion ($16 billion) in July, the lowest since July 2005.
That follows unprecedented falls since April for a year-to-date drop of 21.2% - already more than twice as large as any full-year decline since such records began in 2002.
"With people feeling insecure about their jobs, and vulnerable to policy missteps, the best thing they can do with their money is to pay off debt", in a longer-term negative for the credit cycle, Credit Suisse (SIX:CSGN) strategist Damien Boey said.
It is also a global trend as savings rates have surged and debts dropped as lockdowns have limited spending on entertainment and other discretionary purchases. record quarterly drop in U.S. credit card balances last quarter pushed household debt there to its lowest in six years. That puts pressure on credit growth and fee income at banks.
ANZ Bank ANZ.AX and Commonwealth Bank of Australia CBA.AX have seen their credit card loan books drop by about A$2 billion, about 20% or more, since the onset of the pandemic, their chief executives told a parliamentary committee last week.
"It's a massive shift and it is a prudent and conservative action by our customers," ANZ CEO Shayne Elliott said.
Jefferies' banks analyst Brian Johnson said the pandemic had also accelerated a move away from credit cards toward debit transactions, which along with millenials' preference for buy-now-pay-later methods would hurt banks revenue.
"The behavioural shift from credit to debit reduces their fee income at the same time as reduced activity reduces their fees as well," he said. ($1 = 1.3725 Australian dollars)
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https://tmsnrt.rs/2OLcAmA Australians' rush to raid pensions, repay debt bodes ill for big banks