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National credit card debt falls to 14-year low

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:

  1. Value of transactions = down 6%
  2. 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

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