Credit card debt hits record high: RBA
Credit card debt has hit a new record of $49.41 billion in May, with three-quarters of credit cards now accruing interest, according to the latest figures from the Reserve Bank of Australia.
Total credit card debt has increased year-on-year by almost $2 billion, despite a slowdown in the number of new credit accounts opened from 35,000 in May 2010 down to 18,000 in May 2011.
Financial comparison website RateCity also compared the average purchase interest rate, which was found to have increased by 40 basis points to 17.30 per cent since May 2010.
RateCity chief executive Damian Smith said that more concerning than the jump in credit card debt was the amount of debt now accruing interest.
“We’ve found that credit card balances costing card holders interest increased by almost 6 per cent in May 2011 compared to May 2010.
“Card holders are not only being charged higher interest rates than last year, but they are also paying more in interest from bigger debts,” he said.
Smith said his company found the average credit card holder paid $35.70 in interest in May 2011, an increase of $2.10 from May 2010.
Smith also said the proportion of credit card debt from cash advances was concerning.
“In the year to May 2011, cash advances totalled $10.7 billion. Even though this is a smaller amount of cash taken out by card holders than in previous years, it still shows that too many credit card holders are relying on getting by using cash advances,” he said.
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