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Credit card debt drops below $20 billion
New RBA figures out today show Australians have slashed the national credit card bill to $19.71 billion in October – the first time debt accruing interest has dropped below $20 billion in almost 16 years.
In the past year, Australians have wiped $7.80 billion in debt and taken the scissors to almost one million credit card accounts.
However, the rate at which Australians are paying off debt and closing cards has slowed in October. Also, people gave their credit cards more of a workout in October, spending $473.8 million more month-on-month, in original terms.
Credit card statistics: monthly and year-on-year changes
| October | Monthly change | Year-on-year change | |
| (Sept vs Oct 2020) | (Oct 2019 vs Oct 2020) | ||
| Number of credit card accounts | -78,120 | -986,215 | |
12,909,231 | -0.60% | -7.10% | |
| Total balances accruing interest | -$362.5 million | -$7.80 billion | |
$19.71 billion | -1.81% | -28.34% | |
| Total number of transactions | 6.7 million | -14.0 million | |
233.2 million | 2.97% | -5.65% | |
| Total value of transactions | $473.8 million | -$3.24 billion | |
$20.34 billion | 2.38% | -13.74% |
Source: RBA, released 7 December 2020, original data, excludes commercial cards.
RateCity.com.au research director, Sally Tindall, said it was great to see the total debt accruing interest drop below $20 billion.
“It’s taken us 16 years to get here, and let’s hope we can keep the debt accruing interest under $20 billion on the other side of Christmas,” she said.
“While Australians are still chipping away at their outstanding credit card debt, the rate at which we’re knocking it off has slowed.
“Next month the number of transactions is likely to spike as a result of pre-Christmas sales, such as Click Frenzy and Black Friday.
“The real test will be whether the debt accruing interest spikes too or whether Australians have learnt their lesson about the perils of racking up high interest credit card debt.
“If you’ve given your credit card a workout in the lead up to Christmas, try and work out a plan to pay your debt off before your interest free days expire.
“The last thing you want is to start 2021 with a mountain of debt at rates as high as 24.99 per cent,” she said.
Tips for using your credit card this Christmas
- Set a budget: Make a list and don’t overspend.
- Take away the temptation: Put your credit into the freezer once you’ve reached your budget limit.
- Make a plan to pay it back: Before you spend, make sure you have enough money to pay it back in January, so you’re not lumped with interest charges.
Credit card statistics: change since COVID
| March | October | Change since COVID | |
| Number of credit card accounts | 13,641,553 | 12,909,231 | 732,322 |
Lowest since Nov 2007 | -5.37% | ||
| Balances accruing interest | $26.98 billion | $19.71 billion | -$7.27 billion |
Lowest since Oct 2004 | -26.94% |
Source: RBA, released 7 December 2020, original data, excludes commercial cards.
Disclaimer
This article is over two years old, last updated on December 7, 2020. 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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