Credit card debt continues to defy RBA hikes

Credit card debt from Australian households attracting interest charges has fallen for the third month in a row, defying the RBA rate hikes.

Data released today from the RBA for the month of September shows the total credit card bill for households dropped by $144.2 million to $16.80 billion – the lowest level since March 2003. This is based on personal credit card data in original terms.

The number of credit card accounts dropped slightly to 12.39 million this month, down by just 372 accounts (-0.003 per cent). The number of accounts has now been below 12.5 million for the past 15 months.

Credit card statistics: personal credit cards in September 2022

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

Source: RBA, released 7 Nov 2022, original data, excludes commercial cards. Monthly change is Aug 2022 to Sept 2022, year-on-year change is Sept 2021 to Sept 2022.

Spending remains strong, despite RBA rate hikes

The value of credit card transactions was $25.49 billion in September, in original terms. While debit card transactions clocked in at $45.15 billion.

Combined, Australians spent a total of $70.64 billion on their credit and debit cards. This was the second highest level on record behind the August figures, in original terms. Excludes commercial cards.

Spending on credit and debit cards: September 2022

Source: RBA, released 7 Nov 2022, original data, excludes commercial cards. Monthly change is Aug 2022 to Sept 2022, year-on-year change is Sept 2021 to Sept 2022.

RateCity.com.au research director, Sally Tindall, said: “Australians have continued to chip away at credit card debt for three months in a row, despite rising interest rates.”

“While $16.80 billion is a huge amount to be paying a high rate of interest on, it’s encouraging to see credit card debt almost down to the lowest point since the records began in 2002,” she said.

“As interest rates and the cost of goods keep rising, it’s great to see people clearing their debts where they can. It is only going to get tougher for families over the next few months, so getting on top of bad debt now will help take the pressure off down the track.

“Worryingly, spending across both credit and debit cards remained strong in September, despite the RBA hikes, clocking in at one of the highest values on record.

“We expect households will start making bigger cutbacks in their spending in the months ahead as families start to feel the full impact of the RBA hikes, which typically take two- to three-months to hit people’s bank accounts.

“If you are feeling the pinch, try and keep the credit card locked away in the bottom drawer. While it can be tempting to plug a hole in your budget with your card, it’s likely to make a bad situation worse when these bills roll in on top of the mortgage rate hike letters,” she said.

Source RateCity.com.au, RBA, released 7 Nov 2022, original data, excludes commercial cards.

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