Alarms bells ring as credit card debt rises for 2nd month in a row

Australia’s total credit card debt has risen for the second month in a row to $17.24 billion, according to new data released today from the RBA.

For the first time since May 2019, the number of credit card accounts has also risen month-on-month, albeit slightly, to a total of 12.4 million accounts.

RateCity.com.au research director, Sally Tindall, said: “The warning bells are ringing with credit card debt rising for the second month in a row.”

“People who went to town on their credit cards in the November sales may now be struggling to pay it all back, especially if they’ve been financially impacted by COVID,” she said.

“With rising inflation sending the price of goods, like petrol, soaring, some families could be turning to their credit cards to help pay the bills”.

The RBA statistics also showed the number of credit card accounts has risen for the first time in over two and a half years.

“Credit card companies are actively promoting ‘no interest’ cards to take on the booming buy now, pay later sector, so it’s no surprise to see the number of credit card accounts creep up,” she said.

“If you’re struggling to pay the bills because of Omicron, or some other change in circumstances, pick up the phone and ask your providers for help. 

“Your credit card might get you out of a tight squeeze, but if you can’t pay it back the next month in full, you could find yourself in a world of pain,” she said.

Tips to deal with credit card debt 

• Call your bill providers (energy, telco etc) and ask for a temporary reprieve.
• Cut back on non-essential spending until your credit card is back in the black.
• Ask your credit card provider for a reduced interest rate or consider switching to a low-rate card.
• An alternative is to switch your debt to a personal loan which forces you to pay the debt back in full.
• Once you’ve cleared your debt, consider dropping your credit card limit or cutting up the card altogether.

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