Aussies pay down card debt
CONSUMERS are showing a commitment to crushing their credit card debt and are avoiding the temptation of rising card limits for this expensive form of borrowing money.
A new analysis of Reserve Bank of Australia data has found that while credit card limits have jumped 10 per cent to a massive total of $ 152 billion in the past five years, balances that are being charged interest have dropped 11 per cent to $ 32.8 billion.
This is despite the recent rise in credit card use as tap- and- go payments surge in popularity. It is still a huge national interest bill – about $ 6.5 billion a year or almost $ 400 per credit card – but debt specialists say consumers are on the right track.
Credit cards typically start charging interest on purchases once their interest- free period expires – usually up to 55 days after the sale.
“Cardholders are exercising discipline and getting serious about paying off their credit cards,” Bessie Hassan, spokeswoman for comparison web- site Finder. com. au, said. Finder. com. au’s research found the number of purchases made on credit cards had jumped 57 per cent in the past five years, and that consumers were making an average 30 credit card transactions a month. Average cardholders repaid $ 43,532 on their credit cards in the past 12 months, more than their purchases.
“Australians are being quite proactive in chipping away at their debt,” Ms Hassan said.
Separate research by credit agency Equifax has found that credit card applications had increased in all states during the June quarter.
“The average value amount a consumer applies for on a credit card has doubled in the past three years,” Equifax senior general manager of consumer products Angus Luffman said.
“Yet, in the same period, the total credit card balances accruing interest have declined. “This suggests consumers are using credit cards more frequently while also being careful not to add to the debt load.”
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