Australians are shelling out millions of dollars a day just in credit card interest

AUSTRALIANS are addicted to credit cards and are willingly shelling out millions a day in interest, unable to repay their debt.

EXCLUSIVE

AUSTRALIANS are shelling out a whopping $12.3 million a day — or about $512,000 every hour — in credit card interest as many customers remain unable to pay off their debts.

Alarmingly new statistics have revealed the nation’s plastic debt is stubbornly high and cardholders are making little inroads in whittling their balances down.

Analysis of Reserve Bank of Australia data by financial services firm Canstar has shown the collective interest the country pays on credit card debt per month is about $374 million.

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Credit card interest rates remain stubbornly high as Australians battle debts.

This is based on card customers paying an average interest rate of 14.25 per cent on the average card debt of $1883.

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Overall card debt is sitting at $51.3 billion and about two thirds of this, $31.4 billion, is accruing interest — figures that have remained very high in recent years.

Canstar’s research expert Mitchell Watson said excessive spending on credit cards was “staggering” and he urged people to resist adding more to their already accumulated debts.

Canstar spokesman Mitchell Watson urged people to steer clear of increasing their credit card debts.

“With the festive season around the corner and more temptation to use your credit card, it’s important to make a dent in your credit card debt now,’’ he said.

“For anyone with a home loan, the savings you are generating from low home loan interest rates could be going into clearing their credit card debt.”

Credit cards remain a hot topic in the financial services industry and one under close scrutiny.

Stubbornly high interest rates and high fees on cards is tipped to be the next area to experience changes following on from the announcement by the big four banks to dump ATM fees.

The banking sector remains under intense scrutiny with financial institutions being forced to recently deliver submissions to the Productivity Commission’s inquiry into competition in the financial system.

Consumer finance expert Lisa Montgomery said Australians needed to steer clear of using plastic as an extension of their income.

Consumer finance expert Lisa Montgomery said too many people are relying on credit.

“For many families and individuals they are needed to supplement their income with the use of a credit card and that’s not just for the things we want, for some people it’s for the things they need,’’ she said.

“Because the minimum repayments on credit cards are so low people tend to treat that debt by ignoring it a bit, we don’t rate it because it’s only asking for small amounts per month.”

Minimum repayments on credit cards remain extremely low — in many cases they are just two per cent of the total debt owing.

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