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December spending spree kicks credit card debt back above $20 billion

December spending spree kicks credit card debt back above $20 billion

Credit card debt accruing interest has risen for the second month in a row, now back above $20 billion dollars.

The latest RBA statistics out today show debt accruing interest increased 1 per cent from November to December to $20.16 billion on personal credit cards in original terms. It had fallen below $20 billion in October 2020.

As a result, Australians were hit with an estimated total interest bill of over $290 million for the month of December, according RateCity.com.au analysis of RBA data.

While credit debt rose in both November and December, compared to last year, credit card spending is down 4 per cent and debt accruing interest has dropped by a staggering 26 per cent.

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

Dec-2020

Monthly change

(Nov vs Dec 2020)

Annual change

(Dec 2019 vs Dec 2020)

No. of credit card accounts

12, 822 938
Lowest since Aug 2007
-34,961
-0.3%
-971,280
-7%

Balances accruing interest

$20.16 billion$205 million
1%
-$6.98 billion
-26%

Value of transactions

$24.60 billion$1.81 billion
8%
-$1.04 billion
-4%

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

Australians put a mammoth $24.60 billion on their credit cards in December, that’s 8 percent higher than November.

However, it wasn’t just credit cards getting a workout, debit card transactions were up 11 per cent month-on-month to $40.86 billion, the highest on record.

Year-on-year debit card transactions have increased 18 per cent, up $6.27 billion from the previous December.

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

Value of transactions 

Dec-2020

Monthly change

(Nov vs Dec 2020)

Annual change

(Dec 2019 vs Dec 2020)

 Debit Cards

$40.86 billion
Highest on record
$4.12 billion
(11%)
$6.27 billion
(18%)

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

RateCity.com.au research director, Sally Tindall, said: “Australians went on a credit card spending spree over the Christmas period, with almost $25 billion worth of transactions.”

“While households tend to spend more over the holidays, what’s worrying is for two months in a row, debt accruing interest has increased,” she said.

“With sky high interest rates that climb up to 24.99 per cent, credit card debt can be crippling.

“As the Reserve Bank Governor, Philip Lowe, said on Friday, people shouldn’t just accept high interest rates – they should shop around.

“If you have credit card debt, you could save yourself hundreds of dollars by switching to a card with an interest rate under 10 per cent.

“On the RateCity database there are 15 credit cards with interest rates under 10 per cent, including two of the big four banks.

“Debit card spending is at a record high, despite the financial stresses of COVID.

“Although debit card transactions don’t accrue interest – it may still be hanging over people’s heads if they have used buy now, pay later,” she said.

Afterpay says 80 per cent of its customers link their account to a debit card

“Right now, many buy now, pay later customers will still be dealing with debt they racked up over the holidays,” she said.

“If you have credit card or buy now, pay later debt, make a plan to pay it off as quickly as you can.”

List of credit cards with interest rates under 10% on RateCity.com.au 

Provider

Card Name 

Purchase Rate 

Annual Fee 

Greater Bank Visa Credit Card 5.95% $49
G&C Mutual BankLow Rate Visa Credit Card7.49%$50
Auswide BankLow Rate Visa Card 8.05%$50
American ExpressLow Rate Credit Card8.99%$0 
Community First Credit UnionLow Rate Credit Card8.99%$40
Easy Street Financial ServicesEasy Low Rate Visa Credit Card8.99%$40
MOVE BankLow Rate Credit Card8.99%$59 (waived in first year)
Defence Bank Foundation Visa Card8.99%$45
Bank AustraliaLow Rate Visa Credit Card9.39%$59
Bank FirstVisa Platinum Credit Card9.59%$99
WestpacLite Card9.90%$108
Commonwealth Bank of AustraliaEssentials9.90%$60/$24 if opting for online statements
Australian UnityLow Rate Visa Credit Card9.90%$59
Bank of usVisa Credit Card9.99%$39
First Option Bank LtdLow Rate Visa Credit Card9.99%$48

Source: RateCity.com.au

Note: Greater Bank purchase rate increases to 9.95% in April. Bank First offers 0% on purchases in first 6 months. Defence Bank offers 3.99% purchase rate for 6 months.

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This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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