Australians are increasingly turning to credit cards just to get by, a new report has found.
Numerous credit card records were broken in June – including the highest number of purchases ever made on plastic. This led to Australia’s credit card debt increasing by $178 million in June – with total credit card debt at $40.5 billion – rising for the fourth month in a row. The analysis of Reserve Bank data, by comparison site Finder, revealed Aussies made 301 million purchases on credit in June – the highest number on record.
Finder’s Consumer Sentiment Tracker showed 28% of Australians couldn’t manage their finances without a credit card – this has slowly been trending upwards.
The value of purchases made using credit cards in June 2023 recorded $34 billion, marking an 8.4% increase over the past year.
Balances accruing interest on credit cards amounted to $18.6 billion, reflecting a 2.3% increase over the past year.
Cash advances also demonstrated growth, with a value of $436 million in June 2023. This figure represents a 1.16% increase compared to the same month the previous year. The average cash advance per month reached $382.
Finder's credit card expert, Amy Bradney-George, said: “We’re seeing an over reliance on credit as people struggle to manage the cost of living crisis, with emergency savings wiped in some households and expenses feel out of control.”
Ms Bradney-George urged Aussies to take matters into their own hands.
“Consider transferring your outstanding balance to a 0% interest balance transfer card and aim to make purchases only using a debit card until you can dig yourself out of the red," she said.
“If making repayments is difficult or causing stress, contact your bank or lender to discuss solutions. You can also get free financial counselling by calling the National Debt Helpline on 1800 007 007.
“Remember wealth can be an illusion – lots of Australians are feeling the pinch right now. So rather than trying to keep up with the Joneses, focus on what’s affordable for you.
“Look for ways to supercharge your cash flow and set some low and no-spend challenges for yourself.”