Australia’s total credit card debt rose for the second consecutive month to $17.24 billion, according to new data released today by the RBA.
For the first time since May 2019, the number of credit card accounts also increased month-over-month, albeit slightly, to a total of 12.4 million accounts.
RateCity.com.au research director Sally Tindall said: “Warning bells are ringing with credit card debt rising for the second consecutive month.”
“People who went to town with their credit cards during the November sales may now be struggling to pay it all back, especially if they’ve been impacted financially by COVID,” she said.
“With rising inflation causing the price of goods, like gas, to skyrocket, some families may be turning to their credit cards to help pay the bills.”
RBA statistics also showed that the number of credit card accounts rose for the first time in more than two and a half years.
“Credit card companies are actively promoting ‘interest-free’ cards to tackle the booming buy-now-pay-later industry, so it’s no surprise to see the number of credit cards increase,” she said.
“If you’re having trouble paying your bills because of Omicron or some other change in circumstances, pick up the phone and ask your suppliers for help.
“Your credit card could get you out of a bind, but if you can’t pay it off in full the next month, you could find yourself in a world of pain,” she said.
Tips for Dealing with Credit Card Debt
- Call your bill providers (energy, telco, etc.) and ask for a temporary reprieve.
- Cut back on non-essential spending until your credit card is in the black again.
- Ask your credit card provider for a lower interest rate or consider switching to a low rate card.
- An alternative is to convert your debt into a personal loan that requires you to repay the debt in full.
- Once you’ve settled your debt, consider reducing your credit card limit or removing the card altogether.