‘Agonising’: Credit card debt rising as cost of living bites households
Credit card debt is on the rise, so how can you go about getting yours under control? Photo: TND
Australians are racking up higher credit card bills as the cost of living bites, with the latest RBA data showing four straight months of rising debts.
Despite an economy-wide paying down of credit card debts during the COVID lockdowns last year, Australians have since begun to swipe and tap their cards in greater numbers, pushing up their outstanding bills.
Prices for petrol, electricity, food and rents are going up, and soon mortgage bills will join the mix, putting even more pressure on families.
Debt-accruing interest rose 0.3 per cent in February to $17.4 billion, the RBA said on Thursday, although is still 11.4 per cent lower year-on-year.
RateCity research director Sally Tindall said it’s the fourth straight month that credit card debt has ticked upwards, starting in December last year.
“While the rises have, so far, been relatively moderate, it’s a red flag some Australians are doing it tough,” she said.
“Australians made huge headway into credit card debt over the last two years. It’s agonising to see some of that hard work come undone.”
The higher debts come amid rising household budget pressures, with the increasing cost of living currently outpacing wages growth.
“You only have to go to the petrol station or the supermarket to know that inflation is on the rise and that’s putting pressure on some family budgets,” Ms Tindall said.
Tips for dealing with your credit card debt
Ms Tindall said there are a few ways Australians can deal with credit card debt – some are areas TND has covered previously, so click the links for additional expert advice.
- Call your bill providers, including utilities providers, and ask for a temporary reprieve on your debts. They’re required to assess these requests for hardship, so if you’re struggling it’s a good option.
- Try to cut down on non-essential spending to help you get your debt under control. There are myriad ways to approach doing this.
- Ask your bank for a reduced credit card interest rate or consider switching to a low-rate card.
- Switch your debt to a personal loan, requiring you to pay the debt back in full. But consider the pros and cons carefully first.