The amount of personal credit card debt owed by Australians edged closer to an eye-watering $20 billion in November 2020, despite massive attempts to wind back the debt.
The amount of personal credit card debt owed by Australians edged closer to an eye-watering $20 billion last year, despite massive attempts to wind back the debt.
Data released by the Reserve Bank of Australia showed that in November, balances accruing interest on personal credit cards grew by $241.7 million to $19.96 billion.
That's despite $7.44 billion being paid down on personal credit card debt over the course of the past 12 months during the height of the COVID-19 pandemic.
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Finance expert from Canstar Steve Mickenbecker said despite the increase many Australians have been taking charge of their credit card debt.
"COVID-19-plagued 2020 has been a period for tightening up the household finances for many Australians, with $7.44 billion cut off personal credit card debt," Mr Mickenbecker said.
"Opportunities to spend have contracted as a result of the lockdowns and a part of the $36 billion early release of superannuation has found its way into credit cards, extinguishing stubborn debt."
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He theorised that it was not unexpected for Australians to use credit cards more leading into the holiday season.
"The modest November increase in debt should not surprise, leading into Christmas and coming off a bumper Black Friday and Cyber Monday. We may have expected a bigger increase," Mr Mickenbecker said.
"The bigger picture remains one of restraint, hopefully a trend that is sustained.
"The Reserve Bank's November data may give banks a glimmer of hope that the credit card business is on the way back, but nobody wants to see a return to the time when stubborn debt and impulse spending inflicted long term damage to customers."
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Sally Tindall, research director at RateCity.com.au, said the spending showed renewed consumer confidence.
"Australians went on a pre-Christmas shopping spree in November, spurred on by the Click Frenzy, Black Friday and Cyber Monday sales," Ms Tindall said.
"With the economy bouncing back from a recession, and every state out of lockdown, Australians felt comfortable enough to splash some cash.
"While this bump in spending is great for retailers, credit card holders should not get complacent, with debt accruing interest rising for first time in almost two years."
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Source: 9News https://www.9news.com.au/national/australian-credit-card-debt-rises-november-2020-holiday-sales/00fe862c-9a2e-4d92-8030-2070efefc5de