There are grim signs that Australians are having to turn to their credit cards to combat the rising cost of living.
Credit card debt is now on the rise, according to data released by the Reserve Bank today, with millions added to the books for many Australians.
The total credit card bill for households increased by $86.6 million to hit $16.89 billion in October, figures show.
That comes after the value of credit card transactions fell from July to September, a worrying sign that the rising cost of living could have begun to bite Australian in the pocket, according to RateCity.com.au research director Sally Tindall.
“Some households are struggling to clear their credit cards in the face of cost of living and mortgage repayment pressures,” she said.
“After three months of chipping away at credit card bills, the total debt is back up, albeit slightly, to $16.89 billion this month. With the average credit card rate at 17.53 per cent, that’s a huge amount to paying interest on,” she said.
Debit card transactions have grown by 2.5 per cent or $1.13 billion, to reach $46.29 billion in October.
Combined, Australians spent a total of $72.44 billion on their credit and debit cards. This was the second highest level on record behind the August figures, in original terms.
“Spending remained strong across both credit and debit cards in October, clocking in at the second highest level on record, despite the RBA hikes. These figures are unlikely to ease in the next round of data after Australians opened up their wallets to take advantage of the November sales,” Ms Tindall said.
The timing of the cost of living crisis with Christmas means that Australians are unable to opt for cutting back on spending according to Ms Tindall.
“We expect households will start to make cutbacks in their spending, but potentially not until next year, as families start to feel the full impact of the rate hikes, which typically take two- to three-months to hit people’s bank accounts,” she said.
Ms Tindall urged Australians to reconsider reaching for their credit card, despite the temptation that the holiday season brings.
“Put the credit card in the bottom draw this Christmas, so you’re not tempted to spend money you can’t afford to repay,” she said.
Story Credit: news.com.au