Australians Get Deeper into Credit Card Debt

“Crisis on cards as credit rates tipped to soar,” reports Frank Walker in The Age. “Australia’s love affair with credit cards has reached a crisis, with debt hitting record levels, more and more Australians using cards to meet mortgage payments and warnings that card interest rates are about to soar.”

Your typical Aussie has AU$3,000 in credit card debt. Aussies took out AU$1 billion in cash advances on their credit cards in July, according to Reserve Bank figures. July spending was AU$16.4 billion total. Meanwhile, “Financial experts are predicting the average credit card interest rate of 16 per cent will increase by two to three percentage points over the next eighteen months.”

Such an increase would be a disaster. “I have been doing this for 17 years and it is the worst I have ever seen, “ says Wendy Luckett, a financial counsellor at Credit Line. “I am seeing people who are contemplating suicide, marriages are breaking up under the strain and the human cost is enormous. It is not just poorer people getting too far into debt. I am seeing professional people with big homes, private schools and AU$40,000 credit limits where something has gone wrong and they can’t meet repayments.”

Dan Denning
Markets and Money

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.

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4 Comments on "Australians Get Deeper into Credit Card Debt"

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Many years ago my wife & I attended a wealth creation seminar (scam!) where the presenter said “Put your hand up if you have a credit card.” There were at least 500 people in the room and the vast majority put up a hand, including the two of us. He then said “Put your hand down if you DON’T pay off the balance each month.” There were just 4 hands left up other than ours. We were both astounded as we considered ourselves quite uneducated when it came to finance but we knew we didn’t want to be paying 14%… Read more »
Rob of Brisbane
Australians are not in love with credit cards. They are reliant on credit cards in order to make ends meet. Before, credit cards were used to buy the little luxuries in life. Now they are being used to purchase fuel, buy food and pay the mortgage. The cost of living is skyrocketing due mainly to demand on energy “Peak Oil” In todays “must have “ society, we would not function without credit cards? $40 billion of credit card debt has been racked up. Imagine the jobs and consumption that this has generated. I guesstimate some 400,000 jobs directly and indirectly… Read more »
Sadly, this is the state of the nation. I agree with bassmanpete. We are a nation fixated on technology and trends – everything must be better, faster and easier. With that comes the need for instant gratification. I have been in the debt recovery industry over 10 years and the levels of debt acrued by gen x-ers and gen y-ers is outrageous. But more surprisingly there is little to no education on the matter. With the increase of savvy marketing methods (toilet door ads, internet, email, mobile phone) there is no escape from enticing product advertising. Coupled with the mailing… Read more »
Keepleft, Mot Adv-NSW
Keepleft, Mot Adv-NSW

Credit card debt is very much a social problem and folk *must* make much greater effort at removing this scourge from their lives.

I use a ‘debit’ card myself, and am satisfied with that. Avoid ‘credit’ cards, whatever you do in this odd life, avoid them without fail.

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