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WhatsNew2Day > News > Cost of living crisis: Credit card spending hits all-time high as experts issue urgent warning
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Cost of living crisis: Credit card spending hits all-time high as experts issue urgent warning

Last updated: 2023/03/21 at 10:50 AM
Jacky 2 hours ago
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In January, monthly credit card purchases hit a record $33.5 billion, according to Reserve Bank of Australia data (shopper pictured during the 2018 Boxing Day sales in Melbourne)
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Urgent warning for debt-burdened Australians as credit card spending hits all-time high after 10 consecutive cash rate hikesShare or comment on this article:

Urgent warning for debt-burdened Australians as credit card spending hits all-time high after 10 consecutive cash rate hikes

  • Credit card spending hits a record $33.5 billion
  • That’s an increase from 17 percent in the last year.

By Eli Green for Nca Newswire

Published: 10:50 a.m. EDT, March 21, 2023 | Updated: 10:50 a.m. EDT, March 21, 2023

Credit card spending has reached record levels as the cost-of-living crisis hits Australian pockets and experts warn of a looming debt spiral if people keep using their plastic.

In January, monthly credit card purchases hit a record $33.5 billion, according to data from the Reserve Bank of Australia (RBA).

That’s a ‘huge’ 17 per cent increase in the last year, an extra $4.9bn in Australian credit card bills.

With one in two Australians experiencing financial stress, a growing number of people are turning to their credit cards to pay for things they don’t have cash for, according to Amy Bradney-George, Finder’s credit card expert.

“As prices continue to rise, consumers are increasingly relying on credit cards, even to pay for essential items like food and utilities,” said Ms. Bradney-George.

In January, monthly credit card purchases hit a record $33.5 billion, according to Reserve Bank of Australia data (shopper pictured during the 2018 Boxing Day sales in Melbourne)

There has been a 'huge' 17 per cent increase in the last year, an additional $4.9bn in Australian credit card bills.

There has been a ‘huge’ 17 per cent increase in the last year, an additional $4.9bn in Australian credit card bills.

Alarmingly, the percentage of people who rely on their credit cards to manage their finances has increased by 50 percent in the last two years.

One in four Australians (27 per cent) now say they cannot manage their finances without a credit card, up from one in five (18 per cent) in May 2021.

In December 2022, average credit card spending hit $3,056 as holiday spending and inflation created the perfect storm for increased spending.

There is concern that the increasing use of credit cards could put people at risk of falling into a “debt spiral,” where high interest rates keep debt growing despite payments being made.

There is concern that the increased use of credit cards could put people at risk of falling into a

There is concern that the increased use of credit cards could put people at risk of falling into a “debt spiral,” where high interest rates keep debt growing despite payments being made ( pictured, Boxing Day shoppers in 2018)

“With outstanding balances rising, households could quickly find themselves unable to service the debt they have accumulated,” said Ms Bradney-George.

“There is a very real risk that relying on a credit card, or any form of credit, to cover these costs will lead to interest charges and more debt.”

That is intensified by the number of Australians who have low levels of savings, reducing the buffers people could use to pay down debt.

Nearly 50 percent of Australians say they could only live off their savings for a month or less, according to Finder research of 1,310 workers in February and March.

“Even more surprising, 16 percent of workers say their savings would last less than a week,” their report found.

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TAGGED: alltime, Card, cost, Cost of Living Crisis, credit, crisis, dailymail, Experts, high, hits, issue, living, news, spending, urgent, Warning
Jacky March 21, 2023
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