Australians have paid off enormous amounts of credit card debt since we entered lock-down, according to new statistics from the Reserve Bank.
Between March and July, the most recent month for which there is data, Australian consumers reduced their credit card debt from $41.3 billion to $34.7 billion – a drop of 16%.
This is the lowest amount since 2006.
Consumers not only paid off old credit card debt between March and July but also cut back of new spending:
- Value of transactions = down 6%
- Number of transactions = down 17%
At the same time, as the graph shows, the amount of interest being accrued on all credit cards (both personal and business) fell from $28.2 billion to $22.5 billion, a drop of 20%.
It seems Australians have responded to the economic crisis by cutting back on non-essential spending. If you’re thinking of taking out a home loan and you’ve been eliminating your credit card debt – smart move. Your borrowing power can significantly improve if you have less credit card debt and a lower credit card limit