Cracking under pressure: Australians turn to plastic under weight of RBA hikes

Australia’s total credit card debt has risen for the fifth month in a row, in a worrying sign some families are turning to the plastic to make ends meet.

Data released today from the RBA for the month of February shows the total credit card bill attracting interest charges increased by $270 million to $17.75 billion – the highest level since August 2021.

This is based on personal credit card data in original terms.

Credit card statistics: personal credit cards in February 2023

Note: credit card analysis is in original terms and is based on personal credit card data, excluding commercial cards.

Source: RBA, released 11 Apr 2023, original data, excludes commercial cards. Monthly change is Jan 2023 to Feb 2023, year-on-year change is Feb 2022 to Feb 2023.

Source RateCity.com.au. RBA, released 11 April 2023, original data, excludes commercial cards. Note: graph starts at $15 billion.

Spending in February dips slightly

Australians spent less on their debit and credit cards in February, albeit slightly, dropping by $435 million (-0.6 per cent) to $72.71 billion in seasonally adjusted terms, despite the fact the cost of goods and services continued to rise.

Spending on credit and debit cards: February 2023

Note: credit and debit card analysis is in seasonally adjusted terms.

Source: RBA, released 11 April 2023, seasonally adjusted data, excludes commercial cards. Monthly change is Jan 2023 to Feb 2023, year-on-year change is Feb 2022 to Feb 2023.

RateCity.com.au research director, Sally Tindall, said: “Some Australians are starting to crack under the pressure of rising costs and RBA rate hikes as they reach for the credit card to make ends meet.”

“Many families’ budgets have been pummelled from multiple fronts over the last few months as the cost of just about everything goes through the roof,” she said.

“While the credit card can be a bridge to get through to the next pay day, it’s a band-aid solution that can quickly come unstuck.

“The credit card might seem like the only option to get through the month, but there are other solutions to combat the rising cost of living.

“Shopping around for supermarket specials, re-negotiating your energy and other bills, and taking up any concessions and rebates you may be eligible for can all add up to big savings.

“If you are up to your eyeballs in credit card debt, pull the pin. One option is to switch to a personal loan, where are you are forced to pay it back in regular chunks and avoid the temptation to rack up more debt,” she said.

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