Australian credit card holders collectively owe almost $30 billion following rampant credit card spending over the holiday period.
A RateCity analysis of data from the Reserve Bank of Australia (RBA) has revealed that Australian credit card holders will be faced with a bill that totals $28.6 billion as a result of their spending in December alone.
According to the research, the average credit card user will be required to fork out $3,679 to repay debt accumulated over December.
RateCity money editor Sally Tindall noted the difficulties Australians encounter when repaying credit card debt, particularly in the month of February.
“Families are not only dealing with debt from the holidays, they’re now racking up more expenses on their cards to pay for essential back-to-school items,” Ms Tindall said.
“Most people have between 45 and 55 interest-free days, but once they dry up, people get hit with interest rates as high as 24.99 per cent.”
The data also indicated that, as a whole, credit card users currently owe a total of $51.2 billion ($31.6 billion in interest), with the average Australian owing $6,595, accruing $4,073 in interest.
Ms Tindall advised Australians to seek a credit card option with an interest-free period.
“If you are carrying a large amount of debt, transferring the balance to a card that offers an interest-free period can give you some breathing space,” the money editor added.
However, a recent analysis from the Australian Bankers’ Association (ABA) found that Australian credit card users have reduced their overall outstanding balance by $260 million.
The ABA noted that Australian credit card spending totalled almost $325 billion in 2017, with Australians repaying $341 billion, $16 billion more than the total of their spending.
ABA chief economist Tony Pearson believes the new figures indicate that Australians are becoming “financially savvier”.
“Overall credit card holders are becoming more financially savvy, taking care to repay debt and keep their interest costs low,” Mr Pearson said.
“For only the third time ever, Australia has reduced its overall amount outstanding on cards — this time by $260 million.”