- Total personal credit card debt in Australia fell by 4.2% in the year to December, the largest decline on record.
- The decline could reflect a number of factors, including a preference to use savings to fund expenditure at a time when job market conditions are good. It could also be due to increased caution given the downturn in the housing market.
- Buy now, pay later credit providers may have also contributed to the decline.
Australians, collectively, are shunning credit card debt like never before. Well, at least in this century.
According to data released by APRA, Australia’s banking regulator, total personal credit card debt owed to banks declined by 4.2% in the year to December last year, the steepest decline dating back to when records were first kept over 16 years ago.
The chart below comes from Commsec.
In total dollar terms, Australians owe $40.7 billion on credit cards, up from $40.5 billion in November.
Craig James, Chief Economist at Commsec, put the decline in credit card debt over the past year down to “increased job security and strong household balance sheets”.
While true that Australia’s unemployment rate currently sits at the lowest level since June 2011, one factor that along with less generous credit card reward point schemes may be encouraging Australians to use their own money, rather than taking on additional debt, to fund spending, it could also reflect increased caution at a time when property prices are falling in many parts of the country.
Buy now, pay later credit providers may have also contributed to the decline.
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