Credit card debt rises for the third month in a row – new data reveals

It seems that Aussie households are struggling to clear their Christmas debts.

In fact, credit card debt attracting interest charges has risen for the third month in a row according to the latest RBA credit card statistics.

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.

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 

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

RateCity.com.au research director, Sally Tindall, said:

“An increase in credit card debt was expected this month, however, this doesn’t make the news any easier to swallow.

While we’re used to seeing credit card debt rise over the summer, the concern is some households won’t be able to get back on track this time around.

At a total credit card bill of $17.81 billion, Australian households are shelling out an estimated $8.8 million a day just in interest charges.

This money is far better off in the pockets of struggling households, rather than the banks.

The stage 3 tax cuts, when they start to filter through from 1 July, will help some families start to clear their credit card debts.

However, if you’ve got bills mounting up in the background now, don’t wait until winter to deal with them.

If you have post-Christmas debt you can’t clear, put the credit card out of reach until you get the balance down to zero, because any purchases you make on your card with an existing debt are likely to attract interest charges from day one.

Credit card companies usually provide customers with a certain number of interest-free days on new purchases, however, those days are null and void if you have an existing credit card debt.”

How to 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.

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.

About Chris Dang
Chris Dang is an accountant by training and has worked in the Financial Planning industry for many years. Chris brings together property, accounting, and financial planning experience to help clients of Metropole Wealth Advisory create a holistic plan for their wealth.