Australians rack up $17.61bn of credit card debt

Experts are urging Australians to get on top of their credit cards as the eye-watering post-Christmas debt grew again in February.

Australians have racked up nearly $18bn of credit card debt in February, with the latest Reserve Bank data revealing worrying signs that households are struggling to pay off their Christmas bill.

Estimates suggest it is costing Australians $8.8m a day in interest charges after interest rate charges on credit card debt rose for the third month in a row.

With credit card debt so high, experts are concerned that some families might not be able to get on top of their bills after 13 rate hikes and higher cost of living expenses.

At the end of February, there were 12.67 million personal credit card accounts, almost 300,000 more than May last year.

Estimates suggest credit card debt is costing Australians $8.8m a day in interest charges.

RateCity.com.au research director Sally Tindall said an increase in credit card debt was expected this month, however, this did not make the news any easier to swallow.

“While we’re used to seeing credit card debt rise over summer, the concern is some households won’t be able to get back on track this time around,” she said.

“At a total credit card bill of $17.61bn, Australian households are shelling out an estimated $8.8m a day just in interest charges.

“This money is far better off in the pockets of struggling households, rather than the banks.”

Experts suggest putting down the credit card until the balance reaches zero, because purchases made on credit cards with existing debt could attract interest rate charges from day one.

Ms Tindall said when stage three tax cuts come into effect from July 1 some families should be able to clear their credit card debts.

“However, if you’ve got bills mounting up in the background now, don’t wait until winter to deal with them,” she said.

“If you have post-Christmas debt you can’t clear, put the credit card out of reach until you get the balance down to zero, because any purchases you make on your card with an existing debt are likely to attract interest charges from day one.

“Credit card companies usually provide customers with a certain number of interest free days on new purchases, however, those days are null and void if you have an existing credit card debt.”