The Daily Telegraph has pulled out the old pre-Christmas credit card story and this year Canstar calculates we’ll spend $56.73 billion. This is seen as a sign that squeezed household budgets because of eight interest rate rises in a row have forced Aussies to over-rely on the ‘fantastic’ plastic.

News outlets, such as 9news.com.au tell us that “people are increasingly relying on credit to fund their holiday spending, in a further sign of household budgets stretching under the cost of living burden.”

But let’s look at the numbers to see if consumers are being driven to credit because they’re debt addicts or because maybe they are rational wealth-builders. Or maybe there’s some other reason?

Finder’s national survey showed 24% of people will be relying on credit to cover costs over the Christmas season. That’s about 4.8 million people.

Interestingly, around 9% said they will use the likes of Zip and Afterpay, 13% will rely on credit cards but a whopping 53% — more than one in two — say they will rely on their savings! That’s a great ‘back to the future’ old-fashioned sign that we’re getting real about our money situation.

Also interestingly, retail experts think Christmas spending will be lower overall and in a sign that we are becoming more rational with our money, Finder research revealed “…72 per cent of Australians are taking some action to save money in the lead up to Christmas – equivalent to 14.4 million who are feeling the pinch,” or maybe getting real about their finances!

Continuing this trend of being old-fashioned, the research shows “more than one in 10 (11%) have taken on a second job or side hustle to cover the cost.”

Of course, a sizeable chunk of the 24% who will rely on credit to cover Christmas might be irresponsible spenders, who will get a 2023 statement shock from their credit card supplier but others might be rational users of credit cards. And after the pandemic period, most of us carry little cash and rely on credit cards in this ‘tap and go’ world we live in.

In the middle of this year, before interest rates spiked eight months in a row, we learnt that eight in 10 borrowers have savings buffers and nearly two-thirds can meet a 0.5% rise or more, according to a new borrower survey.

Mortgagebusiness.com.au reported on mortgagees and that “more than two-fifths (42%) said they had more than $20,000 in a mortgage offset account, home loan redraw facility or savings account, while more than a quarter (28%) had more than $50,000, and 14% had more than $100,000.

“Just over a third (34%) were confident to make repayments that are 2% (or more) higher than their current rates.”

The people who should be embracing old-fashioned money ways are those set to lose their fixed rate home loan next year. Analysis from RateCity shows that from Australia's two biggest banks - Commonwealth Bank and Westpac - a staggering $99 billion worth of mortgages are coming off a fixed rate in the second half of 2023 and many borrowers will suddenly be facing a jump in repayments by up to 65%.

In an ideal world, households should be preparing for that mortgage cliff by doing budgets, cutting spending and even finding extra work.

I know it’s fashionable to call Aussies money dummies but I reckon the work of TV, radio and the print media spearheaded by money personalities has resulted in a lot of people becoming money savvy. Also, the arrival of mortgage brokers and the likes of Aussie Home Loans, Wizard, RAMS, etc. have created smarter money Aussies.

And this fact from mortgagebusiness.com.au partly proves it: “The research also found at the time that 37 per cent of Australians have been putting their money into offset/redraw accounts and a third (33 per cent) have been looking for cheaper providers for utilities and services.” That was revealed in September this year and it makes me feel confident that the eight interest rate rises will hit us but not as hard as some experts predict, because a lot more of us are better money managers nowadays.