The amount of official personal consumer debt New Zealanders have has shrunk significantly in the last two years although experts say other consumer debt could be being hidden elsewhere.
Reserve Bank figures show consumer debt fell from $16.8 billion in June 2019 to $14.2b in June this year with bank consumer lending falling from $11.1b to $8.1b during that time.
Tom Hartmann, personal finance lead for Sorted, said one reason for the fall could be more people putting their consumer spending on their mortgage - such as getting an extension on their home loan to buy a car.
Housing debt has risen by 19 per cent or around $50 billion in the same two year period to hit a record high of $317.6 billion.
"That rise in housing debt will probably contain a lot of consumable debt."
Hartmann said it made sense for people to put debt on the house when they could get an interest rate as low as 2 or 3 per cent compared to much higher rates for personal loans or credit cards which usually charge around 21 per cent interest.
"Of course it is not necessarily cheaper if you stretch it out over decades but over the shorter term, with interest rates of 20 per cent plus on a credit card it is."
Keith McLaughlin, managing director of credit bureau Centrix, said a lot of people were turning their backs on credit cards because of the high interest rates and using new products like buy now pay later apps.
"One thing we have noticed is the demand for credit cards has fallen between 30 and 40 per cent over the last couple of years.
"That is mainly being led by the younger demographics. So certainly the demand has fallen there."
McLaughlin said demand for personal loans since the first nationwide lockdown in March and April last year had also fallen by 20 per cent.
"That is being driven by lower volumes of bank personal lending, although in the last couple of months it has crept up slightly again."
He said the cost of credit card debt was one factor and the gulf between those rates and mortgage rates.
"If you are looking for a significant level of credit you are better off to increase your mortgage and not put it on the card. And for a small purchase you are better off to look for an alternative means where there is either little or no interest.
"I think that is the logic behind it and it makes sense."
He said motor vehicle lending had been consistent although it was the first to dip during lockdown periods.
McLaughlin said, as well as consumer awareness, there was more pressure on lenders to undertake responsible lending and lenders could also use comprehensive credit reporting to get the full picture of how much debt a person had, rather than relying on the borrower to tell them.
"That has given far more transparency to both the lenders and the borrowers just what their indebtedness is. I think there is a lot more awareness now as to the cost of credit, the cost of defaulting and the obligations the lenders have now to ensure the borrower has the capability to service it."
While the growth in buy now pay later usage had been high percentage-wise, McLaughlin said it remained a very small part of total consumer debt.
The Reserve Bank figures don't include buy now pay later debt. An RBNZ spokesman confirmed it had no immediate plans to collect the data.
"We continue to monitor the sector, but (while high profile) the size is still small relative to the financial system as a whole."
Hartmann said the popularity of buy now pay later showed people were opting for no interest short term borrowing to spread out consumption.
"One part of that which is difficult to understand is how much people are using debt to pay off debt - for example using a credit card to pay for BNPL and therefore turning short term no interest debt into longer-term interest bearing. That is a concern."
Although, he said, most buy now pay later purchases appeared to be paid for using debit cards or bank account transfers.
Hartmann said people definitely had more alternatives to consumer debt than they have had in the past both due to an increase in housing equity and fin-tech alternatives like buy now pay later and peer to peer lending.
McLaughlin said his best advice for those who got into difficulty paying their debts was to get in touch with their lender as soon as possible to make an arrangement rather than hiding from the problem.
"Don't be embarrassed or ashamed by it. Talk to the credit providers because they are all people. People understand things happen and sometimes you over commit and all of a sudden you can't afford it or go down to a single income. But hiding doesn't resolve it."
He said borrowers should get support from budget advisory services if they can't talk to their lender.
"It is paying penalty interest on penalty interest that kills you."
Hartman said those concerned about their consumer debt levels could tackle it by either focusing on paying off the highest interest bearing debt first or by tackling the smallest amount and using the small win to buoy themselves onwards.