According to a new analysis of Reserve Bank of Australia (RBA) data from rate comparison website finder.com.au, Australians have been left with a financial hangover from their Christmas spending, expected to total a record-high of $29.7 billion in credit card debt (up from $27.9 billion in 2017) – equivalent to $1,863 per credit card.
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The comparison website added that based on how long borrowers said they would take to pay off their credit card debt in 2018 and taking into account an average 55-day interest-free period, it’s expected the interest alone from Christmas spending would total $237 million.
Graham Cooke, insights manager at finder.com.au, said it could take months for many households to pay down the debt accrued over the holiday period.
“If the Christmas spirit is measured by consumer spending, we were all feeling very festive,” Mr Cooke said.
“Aussies spend more on credit cards in December than in any month.
“This over-reliance on credit cards in December means the cost of Christmas is carried well into the new year and could take a toll on household budgets throughout 2019.”
The analysis from finder.com.au comes amid concern raised by Moody’s Analytics over the link between household debt and the housing market.
Moody’s observed that with most of household wealth in the “relatively illiquid asset of housing”, there may be “greater systematic implications if debt repayment difficulties suddenly become a broader concern” amid the fall in property prices.
However, Moody’s claimed that the Australian Prudential Regulation Authority’s (APRA) lending restrictions, and the “favourable” macroeconomic outlook would help ease concerns over high levels of household indebtedness.