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Aussies wipe $2.45 billion off credit card debts in past year

Aussies wipe $2.45 billion off credit card debts in past year

Australians have taken an axe to credit card debt, slashing balances to the lowest level in almost 13 years, according to new RBA figures released today.

Balances accruing interest on personal credit cards plummeted by $2.45 billion year-on-year in November 2019, in original terms.

RBA data shows there is $27.2 billion in debt accruing interest, which is the lowest level since December 2006.

Nov-19Change from previous monthChange from Nov 2018Comments
No. of personal credit card accounts

13,857,155

-37,673
(-0.27%)

-951,865
(-6.43%)

Lowest since January 2011
Total balances accruing interest

$27.20 B

-1.12%

-8.26%

Lowest since December 2006
Balance accruing interest per account

$1,963

-0.85%

-1.96%

Lowest since August 2019
Total credit card limits

$132.37 B

-0.38%

-4.74%

Lowest since October 2014

Notes: Excludes commercial cards, using original data from the RBA. Data released 13 January 2020. Some people have more than one card.

Paul Marshall, chief executive of RateCity, said, “while personal credit card debt has been gradually falling for more than a decade, this past year saw balances take a significant dive.”

“Australians have cleared $2.45 billion in debt accruing interest, which is huge considering we cleared just $675 million in the year before,” he said.

“There are several reasons to explain the sharp drop. Some customers are clearing their card debts to help get their home loan approval over the line. Others are getting credit card applications knocked back thanks to tougher regulations.

“The biggest factor at play is likely to be the shift to buy-now-pay-later services, which are seeing exponential growth and no sign of slowing.

“Credit card providers are responding with offers of rewards points and cashback, as well as low rate options, but it’s unlikely to be enough to win back the masses,” he said.

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This article was reviewed by Senior Finance Writer Liz Seatter before it was published as part of RateCity's Fact Check process.

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