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Credit cards still on the nose, however people with cards start reaching for them more
New figures out today from the RBA show the number of personal credit card accounts has dropped to the lowest point in almost a decade.
The latest data shows Australians closed 112,451 credit card accounts in the month of March, with the total number of accounts dropping by almost a million, year-on-year.
Interestingly, people with credit cards gave them a workout in March. The number of purchases increased by 22.7 million – or 10.42 per cent – month-on-month, in original terms, while the total value of purchases rose by almost $480 million, or 2.32 per cent.
| Personal credit cards | Mar-20 | Feb 2020 vs Mar 2020 | Mar 2019 vs Mar 2020 |
| No. of personal credit card accounts | 13,641,553 | -112,451 | -979,935 |
| Total balances accruing interest | $26.98 billion | -$221,746,322 | -$2,596,636,612 |
| Total number of purchases | 240,880,527 | 22,722,160 | 20,305,570 |
| Value of purchases | $21.15 billion | $479,897,066 | -$482,247,764 |
Notes: excludes commercial cards, using original data from the RBA. Data released 7 May 2020. Some people have more than one card.
Sally Tindall, research director at RateCity.com.au, said, “Unsurprisingly, people who still have a credit card have been reaching for it more as people move towards shopping online and making contactless transactions when out.”
“Despite the increase in transactions, the total debt accruing interest on personal credit cards dropped again this month, however this trend is unfortunately unlikely to continue in the wake of COVID-19.
“Debt accruing interest is likely to start moving in the wrong direction in coming months as people start reaching for the cards more and paying them off less.
“If you’re struggling with credit card debt, call your bank and see what they can do or call the National Debt Helpline on 1800 007 007,” she said.
TIPS FOR MANAGING CREDIT CARD DEBT
- Try and avoid spending on the credit card, unless you are certain you can pay it back.
- If you are paying interest on your card, switch to a low rate card. Credit card interest rates climb as high as 24.99 per cent, which can making paying it off even harder.
- Pay as much as you can. The faster you pay off your debt, the less you’ll fork out in interest.
- Talk to your bank about switching to an instalment plan or a personal loan with a lower interest rate that sees you pay off your debt in instalments.
Disclaimer
This article is over two years old, last updated on May 7, 2020. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent credit cards articles.
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