Warning over $3,480 debt facing millions of Aussies: ‘No choice’
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Diverging Reports Breakdown
Credit card warning as one million Aussies find themselves ‘maxed out’
Finder personal finance expert Sarah Megginson says Aussies are turning to credit cards to make ends meet. The average balance per consumer is now standing at $3,480. One in four Australians had switched credit cards or added a new credit card over the past year. The total value of credit card transactions rose by $382 million or 1 per cent in the month, and $1.2 billion or 4 per cent compared to the same time a year ago. RBA data shows the average credit card rate over the last 12 months was 18.49 per cent, out of the cards charging interest. That means Australians have paid out nearly $3.3 billion in credit card interest charges.
Millions of Australians are turning to credit cards as high mortgage rates and the rising cost of living make it harder to keep up. Credit card debt has jumped to more than $18 billion, the highest level in nearly four years.
More than one million Australians have maxed out their available credit and opened a second credit card, new Finder research found. The average balance per consumer is now standing at $3,480.
Finder personal finance expert Sarah Megginson told Yahoo Finance living expenses have outstripped earnings and many Aussies were putting the balance on credit cards.
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“With limited savings to absorb those higher costs, many Australians have had no choice but to take on more credit card debt to manage rising costs,” she said.
Finder’s survey of 1,005 respondents found one in four Australians had switched credit cards or added a new credit card over the past year.
One in 10 Aussies did it in pursuit of rewards points, while the same proportion were seeking a lower interest rate. Around 6 per cent had applied for a balance transfer, while 4 per cent were looking for lower transaction fees.
Australia’s credit card debt rose to $18.13 billion in March, Reserve Bank of Australia data found, with spending hitting new record highs.
The total value of credit card transactions rose by $382 million or 1 per cent in the month, and $1.2 billion or 4 per cent compared to the same time a year ago.
RBA data shows the average credit card rate over the last 12 months was 18.49 per cent, out of the cards charging interest. That means Australians have paid out nearly $3.3 billion in credit card interest charges in the past year.
Aussies urged to have repayment ‘strategy’ in place
Findex financial advisor Jess Bell said credit cards can get a “bad rap” because people don’t understand the rules around them.
“I like to use it for my own cashflow in the way that any direct debits are done on credit cards, so I don’t have to think about it,” she told Yahoo Finance.
“At the end of each month or each statement that’s due, we pay it off in full. I forecast all my bills for the year with an added 5, 10 per cent buffer for all my expenses.”
She said it was important to have a strategy in place so you can repay your bill each month and avoid paying interest.
“That’s where it can be a really good strategy is you don’t just spend it on the credit card and not keep putting money away for when the credit card [bill] comes due. That’s where people get stuck,” she said.