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Paying off debt like it’s 2006: Aussies clear $2.45bn deficit
In 2019, Australians slashed credit card debt to its lowest level in almost 13 years, with balances accruing interest on personal credit cards plummeting more than $2.45 billion year-on-year.
Paying off debt like it’s 2006: Aussies clear $2.45bn deficit
In 2019, Australians slashed credit card debt to its lowest level in almost 13 years, with balances accruing interest on personal credit cards plummeting more than $2.45 billion year-on-year.
Analysis of RBA data by RateCity showed that there is now just $27.2 billion in debt accruing interest, which it flagged was the lowest level since December 2006.
The number of personal credit card accounts has also dropped, with November 2019 figures showing Australians holding 13,857,155 accounts.
It’s almost 1 million less than the same time last year (-951,865) and is the lowest account number seen since January 2011.
It has coincided with a year-on-year 4.74 per cent decrease in Australia’s total credit card limits to $132.37 billion.
This is the lowest collective credit limit witnessed since October 2014.
RateCity chief executive Paul Marshall commented, “While personal credit card debt has been gradually falling for more than a decade, this past year saw balances take a significant dive.”
He said the $2.45 billion figure is “huge”, considering Australians cleared just $675 million in debt the year before.
“There are several reasons to explain the sharp drop. Some customers are clearing their card debts to help get their home loan approval over the line. Others are getting credit card applications knocked back, thanks to tougher regulations,” he outlined.
“[But] the biggest factor at play is likely to be the shift to buy now, pay later services, which are seeing exponential growth and no sign of slowing.”
While he did note that “credit card providers are responding with offers of rewards points and cashback, as well as low rate options”, the chief executive concluded that it was unlikely to be enough to win back the masses.
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