Credit card debt rises for the third month in a row as households struggle to clear Christmas debt

Credit card debt attracting interest charges has risen for the third month in a row in a sign an increasing number of households are struggling to get on top of their debt in 2024.

The latest RBA credit card statistics, released for the month of February, shows the total credit card bill attracting interest on personal credit cards is now $17.61 billion.

At an average interest rate of 18.34 per cent, Australian households are now collectively shelling out an estimated $8.8 million in interest charges a day.

RBA: Credit card debt attracting interest charges (excludes commercial cards)

Source: RBA, released 8 April 2024, original data, excludes commercial cards.

Post Christmas credit card debt is nothing new. In the summer of 2022/23, credit card debt also rose in the months of December, January and February to a total of $17.75 billion at the end of February 2023, which is higher than it is today.

Credit card debt rose in the 2021/22 summer as well.

The concern is, however, this time around some families might not be able to regain control of their debt under the weight of 13 RBA rate hikes and higher expenses.

Change in personal credit card debt per month

Source: RBA, released 8 April 2024, original data, excludes commercial cards. 

Credit card spending cools in February

Fortunately, spending on credit cooled in February after posting a record high the month before, according to the seasonally adjusted data from the RBA.

This reduced spending will hopefully help some households get back on top of existing credit card debt in the months ahead.

Spending on debit cards, however, hit another new record high of $50.05 billion.

Total value of transactions: personal credit and debit cards

Source: RBA, released 8 April 2024, seasonally adjusted data, excludes commercial cards.

The number of credit card accounts continued to rise, but at a slower pace

The number of credit card accounts rose for the 17th consecutive month, although, with an increase of just 2,809 accounts this month, the pace of growth is now slowing considerably.

As of the end of February, there were 12.67 million personal credit card accounts. This is almost 300,000 more than the recent trough in May 2022, but down considerably from the peak of credit card accounts in June 2017 when there were 15.45 million active credit card accounts.

RBA credit card statistics: February 2024 (Note: commercial cards are excluded)

Source: RBA, released 8 April 2024, original data, excludes commercial cards.

Number of credit card accounts

Source: RBA, released 8 April 2024, original data, excludes commercial cards. 

Kick your credit card debt to the kerb:

1. Stop the leaks. Commit to not using your card until you’ve regained your interest-free days. This should include switching any automatic repayments over to your debit card.
2. Reduce the burn. Ask your bank to reduce your interest rate. If they don’t play ball, consider switching to a lower rate card. The RateCity.com.au database shows there are over 10 credit cards on the market offering rates under 10 per cent.
3. Consider a different exit strategy. Cutting up the card and switching your debt over to a personal loan can be a good option as it will force you to pay down your debt within a set time frame without adding to it.
4. Don’t swap one poison for another: If you kick your credit card habit, try not to sub it for a different form of credit such as buy now, pay later.

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