Credit card debt drops by $9.9 billion since the start of COVID

The national credit card debt accruing interest has dropped by over half a billion dollars in just one month, down to the lowest level since May 2003.

The RBA data for October, released today, shows debt accruing interest on personal credit cards is down $594 million from the previous month and down $9.90 billion since the start of COVID (March 2020), in original terms.

Credit card statistics: personal credit cards in October (excludes commercial cards)

Source: RBA, released 7 December 2021, original data, excludes commercial cards. Monthly change is September to October 2021, year-on-year change is October 2020 to October 2021, since COVID change is March 2020 to October 2021.

Note: Analysis is based on personal credit card data and excludes commercial credit cards.

Credit card debt down, buy now, pay later on the rise

RateCity.com.au research director, Sally Tindall, said Australians had continued to knock off their credit card debt, even out of lockdown.

“Credit card debt has more than halved from the February 2012 peak when debt accruing interest was just shy of $36 billion,” she said.

“Much of the heavy lifting has been done in the last year and a half. Let’s hope this hard work continues into the silly season.

“Lockdown was the wake-up call many Australians needed to kick their credit card habit for good. This month’s data, which was recorded when most of the country was out, or coming out of lockdown, is a positive sign.

“Credit card companies have seemingly managed to stem the exodus of people ditching their cards, with the number of accounts barely dropping in the month,” she said.

Interestingly, debit card spending, which the majority of buy now pay later accounts are linked to, has increased by 9.5 per cent year-on-year, according to the data released today.

“While it’s great to see people turning their backs on credit card debt, if they are swapping one addiction for another, it could still spell trouble,” she said.

“Buy now, pay later platforms might not charge interest but they can still sting you if you don’t make your repayments on time.

“People with debt across multiple platforms can see their budgets unravel in a blink of an eye, if they’re not completely across what they owe and when,” she said.

Source: RBA.gov.au

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