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 NAB Low Rate Card Lower than average ongoing variable purchase rate Reduced $0 annual fee in the first 12 months and $59 p.a thereafter.	Purchase Rate Purchase Rate 12.99 % p.a	Interest Free Days Interest Free Days 55	Card limit No set max	Late Payment Fee $15	Go to site Go to site	Balance Transfer 0% p.a. for 32 months on balance transfers. No annual fee in the first year.	Highlighted
Product Name Card St.George Bank Vertigo Visa (Balance Transfer Offer) Lower than average ongoing variable purchase rate Reduced $0 annual fee in the first 12 months and $55 p.a thereafter.	Purchase Rate Purchase Rate 13.99 % p.a	Interest Free Days Interest Free Days 55	Card limit $40k	Late Payment Fee $15	Go to site Go to site	Balance Transfer 0% p.a. interest on balance transfers for 32 months (0% fee) + $0 first year annual Fee
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 variable 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 up to $200 Cashback when you take out a new Low Rate credit card. New cards only. T&Cs and exclusions apply.
Product Name Card P&N Bank Visa Platinum Ongoing variable purchase rate ranked in the best 20% Apple Pay, Google Pay and Samsung Pay available Domestic travel insurance Free international travel insurance	Purchase Rate Purchase Rate 11.31 % p.a	Interest Free Days Interest Free Days 45	Card limit No set max	Late Payment Fee $5	Go to site Go to site
Product Name Card Heritage Bank Gold Low Rate Ongoing variable purchase rate ranked in the best 20% No Annual Fee	Purchase Rate Purchase Rate 11.30 % p.a	Interest Free Days Interest Free Days	Card limit No set max	Late Payment Fee $20	Go to site More info	Balance Transfer 0% on Balance Transfers for 12 months
Product Name Card Police Credit Union Extralite Lower than average ongoing variable purchase rate No Annual Fee Apple Pay, Google Pay and Samsung Pay available	Purchase Rate Purchase Rate 13.99 % p.a	Interest Free Days Interest Free Days 44	Card limit No set max	Late Payment Fee $15	Go to site Go to site

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Product data updated on 16 Aug 2022

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