Credit card debt splurge trap for the unwary

FRIVOLOUS Christmas shoppers are being warned to watch the massive amounts of credit card debt they are tipped to rack up this festive season.

With just five weeks to go until Christmas, the annual spending bonanza has well and truly started, and it’s expected keen shoppers will rack up $56 billion on credit in November and December – a whopping $3342 per person.

Financial services firm Canstar said this is $1 billion more than for the same period last year and, with credit card interest rates as high as 25 per cent, customers will be hit hard. The nation is already buried in plastic debt – Reserve Bank figures show Australians have $51.4 billion owing, and $31.4 billion is accruing interest.

Canstar spokesman Steve Mickenbecker has warned of the dangers of credit card debt.

“Back in 1996 Australians spent only $3 billion on their credit cards in the month of December,’’ he said. “Fast forward 20 years to December 2016 and we are spending more than nine times that at $28 billion. If you use the credit card this Christmas then set a payment plan to pay down the debt as soon as possible.”

Canstar figures show a customer who racks up $3342 this festive season on plastic, who only pays the minimum amount off at an average interest rate of 17 per cent, will pay $3800 in interest over 18 years.

And for shoppers hunting for discounted goods, Deloitte Retailers’ Christmas Survey, released today, found stores won’t be as eager to offer discounting ahead of Christmas.

“During Christmas 2016 we saw many retailers pay the price for heavy and early discounting, with first quarter sales in 2017 proving to be a challenge for many,” Deloitte spokesman David White said.