Fewer Australians are expected to take on debt as the demand for credit remains flat showing signs of spending priorities shifting towards financial conservatism.

Dun & Bradstreet’s Consumer Credit Expectations Survey shows that expectations for household debt are at their lowest point in three years, with 18 per cent of respondents anticipating their debt will increase in the March quarter.

This compares to 22 per cent and 26 per cent for the past two quarters. The findings correspond to a pool of recent data suggesting a shift in financial priorities away from discretionary spending and towards more prudent debt management as consumers maintain a cautious outlook.

Dun & Bradstreet's CEO, Gareth Jones, said the latest results reflect a changing attitude from consumers towards debt which is consistent with the cautious mood of the economy.

“Overall, we’ve witnessed a sizeable shift in the spending behaviour of the Australian consumer. There is a greater degree of consideration being applied to each spending decision and a greater focus on spending within our means,” he said.

“The use of debit cards is becoming more common, as is a level of caution towards borrowing and debt in general, which has been evident in the increased level of credit card repayments shown in the RBA’s November 2012 figures.

“This attitude towards spending, especially on discretionary items, can have a negative knock-on effect for Australian businesses; something that has been revealed in the latest ABS retail figures, which showed only modest activity, and also in the lower sales expectations from our recent Business Expectations Survey.

“The upside to this ongoing mood of consumer conservatism is that we may see an improvement in the levels of personal debt and delinquency, which should help those households experiencing financial stress.

Correspondingly, 55 per cent of Australians don’t expect to have difficulty meeting their credit obligations in the next three months; an improvement compared to 48 per cent in the September 2012 quarter.

According to Stephen Koukoulas, Dun & Bradstreet's economic advisor, consumers are still reacting to the effects of the GFC.

“Consumers appear to be paying down debt in an orderly manner, limiting the extent to which additional debt is accrued and, from what we can see in the official data, building their savings,” he said.

“While this is likely to be dampening economic growth for the moment, it is ensuring consumers are more secure in the medium term in the event of an unforeseen slowdown.

“If there is no slowdown in the next year or two the current financial circumstances of consumers suggests they will be well placed to underpin ongoing strong growth in consumption and other spending.”