Australians rack up more essential costs on their credit cards

CASH-strapped Australians are racking up alarming amounts on their credit cards in a severe warning for the economy.

EXCLUSIVE

CASH-strapped Australians struggling to pay everyday expenses are racking up soaring amounts on their credit cards for costs including groceries, petrol and council rates, alarmingly new figures have revealed.

Exclusive statistics from National Australia Bank data has revealed the average Australian is spending higher amounts on their credit cards for basic expenses than they were five years ago.

And among the worst categories for increased spending includes paying government costs such as council rates (spending climbed 124 per cent), supermarket spending (up 64 per cent) and car expenses including petrol (up 43 per cent.)

Many Australians are relying on their credit cards to pay for essential items.

TAX: Should work claiming work expenses be scrapped?

Latest Reserve Bank of Australia data has shown the nation’s credit card debt levels are far from subsidising — in June this year Australians owed a whopping $52.3 billion on plastic and about $32.3 billion is accruing interest.

Tribeca Financial’s chief executive officer Ryan Watson said there was cause for concern that Australians were paying for everyday expenses on plastic and failing to pay off their debt each month.

Tribeca Financial chief executive officer Ryan Watson said relying on credit cards to pay for essential items is a serious concern.

“Our drastic increase in the need just to purchase the bare essentials, for example groceries on credit cards shows severe warning signs for our economy,’’ he said.

“Something has to ‘give’ and at the moment some people are just using credit cards to get by.”

MORTGAGES: First home buyers seek urgent assistance

Financial comparison website RateCity’s data shows the average credit card interest rate is 17 per cent but some customers are paying as much as 25 per cent interest on their debts.

Latest industry data shows about 49 per cent of credit card customers fail to pay off their credit card at the end of the month.

Consumer finance expert Heidi Armstrong said the “mounting pressure on household expenses” and shrinking wage growth was putting added pressure on people.

Consumer finance expert Heidi Armstrong said getting in a vicious credit card cycle can be “deadly.”

“Unfortunately the credit card cycle is a deadly one particularly if you’re using credit to cover shortfalls in income,’’ she said.

“With more and more credit card providers reducing the value of certain credit card rewards programs it’s getting harder to justify the benefits of credit cards.”

[e-mail]

@sophieelsworth

SPENDING PER AUSTRALIAN
CATEGORY	NOW	FIVE YEARS AGO	CHANGE
1. Supermarket	$155	$94	+64%
2. Food (restaurant/takeaway)	$135	$69	+95%
3. Car (petrol, car parts)	$133	$93	+43%
4. Government (i.e. rates)	$119	$53	+124%
5. Travel (travel agencies, tour operators)	$115	$66	+74%
6. Stores (department/other retail)	$104	$80	+30%
7. Insurance	$90	$61	+47
8. Hardware stores	$67	Not available	Not available
9. Utilities	$66	$50	+32%
10. Healthcare	$64	$50	+28%
Source: National Australia Bank