RBA credit card figures show Australians continuing to pay down personal debt

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Billions of dollars in credit card debt have been wiped out by ordinary Australians turning their backs on high interest loan products.

New figures from the Reserve Bank of Australia reveal the country’s credit card bill in January fell $7.38 billion from the same month a year ago, with the majority of people opting to pay by debit rather than credit.

On a monthly basis, Australians paid $149 million in interest on personal credit card debt, with the total amount outstanding amounting to $20.01 billion.

The number of credit card accounts in circulation also fell by about one million from a year ago.

RateCity research director Sally Tindall said the drop was welcome after credit card debt rose in the previous two months.

Credit card debt increases anecdotally in November and December due to the Christmas shopping season, which is usually characterized by increased levels of spending and consumption.


“It is positive to see many Australians starting the year to clear some of their Christmas debt, although with over $20 billion still earning interest there is still a long way to go,” said said Ms Tindall.

“At the end of last year, the rate at which people were closing their credit card accounts seemed to be starting to plateau. However, in January there was another spike in the number of people closing their accounts, reigniting the exodus away from credit cards.

The value of debit card transactions also fell after April, but year-over-year transaction value increased by $3.76 billion.

Canstar Chief Financial Officer Steve Mickenbecker said the data still pointed to increased spending across the economy which would be welcomed by the central bank.

“Spending will be welcomed by the Reserve Bank as a necessary precursor to job growth and inflation, but the flip side is that when accompanied by higher stubborn debt, it will add to future pressure on household budgets,” Mickenbecker said. .

“As much as spending is needed in the economy, Australians should continue to prioritize paying off credit card debt before April and we are heading for another spending spree around Easter and school holidays.”

According to RateCity, the average interest rate on a credit card is 17.43%.

“If you have credit card debt attracting double-digit interest, consider switching to a cheaper card or transferring your debt to a low-rate personal loan,” Ms Tindall said.

She also said that 15 providers, including two major banks, had credit card products with rates below 10%.

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