Australians have accumulated record levels of credit card debt, with spending surging in December and many struggling to clear balances. Recent Reserve Bank of Australia (RBA) data indicates a sharp rise in outstanding credit card debt, raising concerns about financial stability amid high living costs.
Credit Card Spending Reaches Historic High
According to the latest figures, Australians spent a record $28 billion on personal credit cards in December 2024. This increase, analysed by financial comparison site Canstar, highlights growing reliance on credit amid persistent financial pressure. The data also shows that debt accruing interest rose by $236 million in just one month, reaching $17.8 billion.
Financial experts warn that rising credit card balances, particularly those subject to interest rates exceeding 20%, are pushing more Australians into long-term debt cycles. Sally Tindall, Canstar’s data insights director, noted that pre-Christmas spending has exacerbated the issue, and “the national addiction to credit card debt is likely to get worse before it gets better.”
More Households Struggling to Repay Loans
The RBA report also indicates an increase in personal loan repayment defaults, further suggesting financial distress. Personal loans, which are often unsecured, are becoming harder for borrowers to manage. This trend, combined with rising credit card balances, underscores the broader financial strain affecting many Australian households.
Despite a robust jobs market and easing inflation, a growing number of people are unable to clear their debts. Analysts predict that economic challenges, including high living costs and stagnant wage growth, will continue to put pressure on household finances.
Key Financial Figures at a Glance
Recent financial data paints a concerning picture of growing debt levels across Australian households. The table below summarises the latest credit card debt statistics based on RBA data :
| Financial Metric | Amount | Change |
|---|---|---|
| Total credit card spending (Dec 2024) | $28 billion | Record high |
| Credit card debt accruing interest | $17.8 billion | +$236 million (monthly) |
| Interest-accruing debt (yearly increase) | $526 million | Increasing |
| Typical interest rates on unpaid balances | Over 20% | High-risk debt |
| Expected cash rate decision (Feb 18) | Possible cut | Relief for mortgage holders |
These figures highlight the growing financial burden on Australian households, with high-interest debt posing significant challenges.
Possible Relief from Interest Rate Cuts
Economists anticipate that the Reserve Bank of Australia may cut the official cash rate on 18 February, potentially easing financial burdens for some borrowers, particularly mortgage holders. However, such a move is unlikely to provide immediate relief for credit card debt, which remains one of the most expensive forms of borrowing.
Experts advise Australians to manage their credit card use carefully, prioritising debt repayment strategies to avoid long-term financial hardship. With interest-accruing credit card debt rising by $526 million over the past year, the financial outlook remains challenging for many households.
To better understand the implications of rising credit card debt, here are some key takeaways from financial analysts:
- Interest rates on unpaid balances can exceed 20%, making it difficult for borrowers to clear their debt.
- The surge in credit card debt is occurring amid a cost-of-living crisis, increasing reliance on borrowing.
- Australia’s job market remains strong, yet financial difficulties persist due to high expenses.
- Banks are reporting an increase in missed personal loan payments, further highlighting financial distress.
These trends suggest that while some Australians use credit cards strategically for loyalty rewards and perks, many are falling into long-term debt cycles due to economic pressures.
