Australians are getting better at paying off credit card debt
Credit card debt is the lowest it has been in more than a decade.
Give yourself a pat on the back, Aussie credit card holders. Outstanding credit card balances have sunk to a ten year low according to recent RBA data analysed by finder.
Australians currently owe $51.4 billion in credit card debt, with 60% of that balance collecting interest. This sounds like a lot but the collective balance accruing interest has dropped to $31.4 billion, which is the lowest level since August 2008. This means that the average individual balance accruing interest is $1,880, which is something that hasn’t been achieved in 12 years.
Australians are becoming more conscious about paying off their debt, a frame of mind that’s especially important to foster coming up to Christmas. There are 16.7 million credit card accounts in Australia used to make over 200 million transactions each month and this is likely to skyrocket over the holiday period. Cardholders should always aim to pay their balances in full and if not, factor in how interest will impact their repayments to avoid falling into unmanageable debt.
If you want a credit card with more breathing room to pay off your purchases over Christmas, you should consider a card with a 0% interest rate for a promotional period. This way you can use your credit card to make purchases and pay it off without the burden of interest for say 12 months. This 0% interest rate only lasts for an introductory period before the standard purchase rate kicks in, so you should aim to clear your balance before this happens.
Otherwise, if you’re struggling to repay an existing debt, you could move it to a card with 0% on balance transfers. Not only can you save on interest costs, but you could also pay off your debt much faster. Similar to 0% purchase offers, a higher standard interest rate will apply to any balance transfers once the promotion ends so it’s best to repay your balance before the revert rate applies.
With Christmas fast approaching, now’s the time to start comparing if you want to pick up a new credit card to tick off your gift list. If you need some help narrowing down your options, you can check out finder’s 12 cards of Christmas for inspiration.