Australians wipe $4.2 billion off credit card debt since COVID

Australians have wiped a staggering $4.2 billion dollars off the national credit card debt accruing interest since the COVID pandemic hit.

New figures released today from the RBA show that since March, credit card debt accruing interest has dropped by 16 per cent to $22.79 billion, the lowest total since October 2005.

During this time almost 400,000 credit card accounts have been closed.

Notes: excludes commercial cards, using original data from the RBA. Data released 7 August 2020.

Credit card trends

Year-on-year, debt accruing interest has dropped by $6.5 billion, while the number of credit card accounts has fallen by 1.31 million.

However, month-on-month, Australians spent $3.46 billion more on their credit cards in June compared to May, the 20 per cent increase likely a result of lockdown being lifted across much of the country.

Notes: excludes commercial cards, using original data from the RBA. Data released 7 August 2020.

Sally Tindall, research director at RateCity, said it’s positive to see so many Australians continuing to clear their debt during the pandemic.

“Since COVID hit in March, Australians wiped almost $4.2 billion off their credit cards – that’s a record-breaking effort that will save some families hundreds of dollars a year in interest,” she said.

“Credit card spending rose in June as people hit the shops after weeks in lockdown. Yet despite this, the total debt accruing interest continued to fall, as many families focused on getting back in the black where they could.

“The pandemic, as awful as it is, has forced thousands of households to reevaluate their budgets and clear their debts.

“They’re doing it by any means possible, including using their super

“If you’re someone who’s managed to clear your credit card debt during COVID, try to keep it that way. Paying down credit card debt is not a lesson anyone wants to learn twice,” she said.

Paying down your credit card debt

Looking to pay down your credit card debt during COVID-19? It may be worth considering switching to a balance transfer card. This allows you to move your existing debt on to a new card charging zero per cent interest for a set period of time. For cardholders struggling with debt, this may offer some much needed breathing room.

Keep in mind that any new payments you make on your balance transfer credit card will immediately begin accruing interest. It’s recommended that you put your balance transfer card in the freezer whilst you chip away at your debt so you’re not tempted to add to it.

Compare credit cards