Credit card debt drops by $149 million as Australians start the year prudently

Australians have started 2021 paying $149 million off their credit card debt and taking the scissors to their cards.

The latest RBA statistics out today show balances accruing interest on personal credit cards dropped to $20.01 billion in January, following rises in November and December, in original terms.

Compared to January last year, the country’s overall credit bill dropped by $7.38 billion.

Many Australians put their wallets away in January after an expensive holiday season, with the value of credit card transactions down $5.32 million from December, a 22 per cent decrease in original terms.

The number of credit card accounts also declined, with more than one million closed year-on-year, hitting the lowest number since June 2007.

Credit card statistics: monthly and year-on-year changes

Source: RBA, released 8 March 2021, original data, excludes commercial cards.

As expected, debit card spending also dropped after Christmas, with transactions down $7.05 billion month-on-month to $33.81 billion on personal cards in original terms.

However, compared to the same time last year, the value of transactions rose $3.76 billion.

January debit cards: monthly and year-on-year changes

Source: RBA, released 8 March 2021, original data, excludes commercial cards.

RateCity.com.au research director, Sally Tindall, said it was good to see Australians getting back on track after two consecutive rises in credit card debt.

“It’s positive to see many Australians starting the year clearing some of their Christmas debt, although with over $20 billion still attracting interest, there’s a long way to go,” she said.

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

“While Australians tightened their belts in January after the usual Christmas splurge, overall spending on debit cards in particular was significantly higher than this time last year, another sign the economy is back on track.

“If you’ve got credit card debt attracting a double-digit interest rate, consider switching to a cheaper card or transferring your debt to a low-rate personal loan.

“While the average credit card rate is 17.43 per cent, there are 15 credit cards with interest rates under 10 per cent, including two of the big four banks,” she said.

Quick tips to pay off credit card debt 

If you're struggling with credit card debt, now may be the right time to consider making a plan to pay it off once and for all. Here are some tips that may help you lower your outsanding credit card balance:

1.  Make a budget and stick to it.
2. Consider consolidating your debt to a lower-rate card or balance transfer card.
3. Lock your credit card away so you’re not tempted to spend more. 
4. Consider lowering your credit limit.

Product Name Card Bendigo Bank Low Rate Credit Card Ongoing purchase rate ranked in the best 20% Lower than average annual fee	Purchase Rate Purchase Rate 0.00 % p.a for 18 months then 11.99%	Interest Free Days Interest Free Days 55	Card limit No set max	Late Payment Fee	Go to site Go to site	Purchase Offers 0% on purchases for up to 18 months from account opening.	Highlighted
Product Name Card Bank of Melbourne Vertigo Visa Lower than average ongoing purchase rate Reduced $0 annual fee in the first 12 months and $55 p.a thereafter.	Purchase Rate Purchase Rate 0.00 % p.a for 6 months then 13.99%	Interest Free Days Interest Free Days 55	Card limit $40k	Late Payment Fee $15	Go to site Go to site	Balance Transfer 0% for 32m BT (0% fee) + $0 First Year annual Fee + 0% APR for 6months
Product Name Card BankSA Vertigo Visa Lower than average ongoing purchase rate Reduced $0 annual fee in the first 12 months and $55 p.a thereafter.	Purchase Rate Purchase Rate 0.00 % p.a for 6 months then 13.99%	Interest Free Days Interest Free Days 55	Card limit $80k	Late Payment Fee $15	Go to site Go to site	Balance Transfer 0% for 32m BT (0% fee) + $0 First Year annual Fee + 0% APR for 6months
Product Name Card St.George Bank Vertigo Visa (Balance Transfer Offer) Lower than average ongoing purchase rate Reduced $0 annual fee in the first 12 months and $55 p.a thereafter.	Purchase Rate Purchase Rate 0.00 % p.a for 6 months then 13.99%	Interest Free Days Interest Free Days 55	Card limit $40k	Late Payment Fee $15	Go to site Go to site	Balance Transfer 0% for 32m BT (0% fee) + $0 First Year annual Fee + 0% APR for 6months.
Product Name Card Westpac Low Rate Card (Cashback offer) 6.99% p.a on balance transfers for 12 months and then 21.49% p.a. Lower than average ongoing purchase rate	Purchase Rate Purchase Rate 13.74 % p.a	Interest Free Days Interest Free Days 55	Card limit $50k	Late Payment Fee $15	Go to site Go to site	Cashback Get $400 Cashback when you take out a new Low Rate credit card
Product Name Card Westpac Low Rate Card (Balance Transfer offer) Lower than average ongoing purchase rate Reduced $0 annual fee in the first 12 months and $59 p.a thereafter.	Purchase Rate Purchase Rate 13.74 % p.a	Interest Free Days Interest Free Days 55	Card limit $50k	Late Payment Fee $15	Go to site Go to site	Balance Transfer 0% for 28 months on balance plus $0 annual fee for the first year

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Data last updated on 6 Dec 2021

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