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Credit card debt continues to plummet in lockdown

Credit card debt continues to plummet in lockdown

07 Oct, 2021 - 2 min read

The national credit card debt accruing interest has continued to tumble in lockdown, dropping by $582 million in the month of August, according to RBA statistics released today.

This takes the national credit card debt on personal cards to $18.32 billion in original terms – the lowest level since January 2004.

The drop comes on the back of a significant fall of $1.11 billion the month prior. As a result, credit card debt has fallen by $1.69 billion in just two months since the start of the Delta lockdowns (July and August 2021).

Credit card statistics: personal credit cards in August - excludes commercial cards

	Amount	Monthly change	Year-on-year change
Number of accounts	12.42 million lowest since December 2006	-47,113 -0.4%	-632,731 -4.9%
Balances accruing interest	$18.32 billion lowest since January 2004	-$582 million -3.1%	-$2.32 billion -11.2%
Value of transactions	$20.07 billion	$543 million 2.8%	$964 million 5.1%

Source: RBA, released 7 October 2021, original data, excludes commercial cards. Monthly change is July – August 2021, year-on-year change is August 2020 to August 2021.

RateCity.com.au research director, Sally Tindall, said the slide in credit card debt was likely to continue for the duration of lockdown.

“As tough as they are, lockdowns have been incredibly effective in getting people to focus on their personal finances,” she said.

“Many families have realised credit card debt is public enemy number one and clearing it has become a priority.

“At this pace, we could see credit card debt accruing interest drop below $18 billion next month, however beyond this, credit card debt could stagnate or worse still, tick up.

“With Christmas around the corner, and COVID relief payments starting to wind up, people could start falling back into old habits if they’re not careful.

“At just over $18 billion in credit card debt, there’s still plenty of work to be done but we’ve come a long way in a relatively short space of time. Just five years ago the national credit card debt was north of $31 billion.

“The concern, however, is some people are swapping one form of credit for another.

“The meteoric rise of buy now, pay later has put a significant dent in credit cards, but people need to be careful they’re not swapping one credit addiction for another,” she said.

Disclaimer

This article is over two years old, last updated on October 7, 2021. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent credit cards articles.

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

Laine Gordon

Money Editor

Laine Gordon is the Money Editor at RateCity and an experienced journalist and research specialist. With a background in news and feature writing, covering finance, media and even food (a passion of hers) at Reed Elsevier publications, Laine brings almost two decades of experience to the team. Having covered major areas of interest to the general public from hip pocket issues to rising and falling interest rates and the impact to mortgages, credit and saving in Australia, she is passionate about researching and telling people’s stories to help others make better decisions about their own finances.