Australians racked up $24 billion in credit card debt for Christmas, as the country remembers how to spend again

Australians went shopping to farewell 2020. (Alexander Bogatyrev, SOPA Images, LightRocket via Getty Images)
  • More than $24 billion was spent on Australian credit cards over the Christmas period, according to RBA forecasts.
  • Although lower than last year, the figure remains substantial, amounting to $1,748 per card, Finder analysis found.
  • It marks a return toward trend, with spending growing sharply during the four weeks from Christmas.
  • Visit Business Insider Australia’s homepage for more stories.

If the pandemic had taught Australians frugality, it was a lesson soon forgotten.

Having paid off $5 billion in credit card debt at the beginning of the pandemic, the festive season had many Australians simply dusting them off again.

Over December, Australians racked up an estimated $24.3 billion in purchases on their cards, according to RBA forecasts.

Potentially some nerves and a sharp decline in credit card numbers, the figure represents a $3 billion fall from last year’s figure.

Still it’s substantial. According to further analysis by Finder, the spend amounts to nearly $1,750 per card, incurring some $194 million in interest.

While December always stands out as a big-spending month, the bumper shopping spree is more evidence of a return towards trend.

Commonwealth analysis shows total spending increased by double-digit annual growth across Christmas and into the new year, with Tasmania, Western Australia and the Northern Territory enjoying the strongest gains.

“Around half of the decline in personal credit since March was due to a decrease in outstanding credit card debt. Some of this decline owed to lower credit card spending by households early in the pandemic,” the RBA wrote in its separate November statement on Monetary Policy.

“Spending on credit cards has increased a little over recent months, as measures to contain the virus have been eased.”

Meanwhile the capacity of Australians to make repayments has been bolstered, the RBA notes, as a result of superannuation withdrawals and government support.

Certainly, those factors helped Australians save $200 billion last year – money Treasury is hoping will find its way into the real economy.

Loosening the purse strings

Certainly, as the pandemic waxes and wanes, consumer confidence has largely clawed its way back.

Most notably, Tuesday’s ANZ consumer confidence survey was supported by growing optimism surrounding an improving economic outlook.

Separate data from the Commonwealth Bank meanwhile shows how Australian attitudes to spending changed in December, and might shape future financial decisions.

“Travel spending intentions jumped solidly in December 2020 as state border restrictions were largely lifted,” senior economist Belinda Allen said.

It may have in part spurred some to buy a new set of wheels, with the intention to buy rising sharply in December.

“Relative to the end of 2019, December 2020 saw strong increases in actual spending on new and used motor vehicles and an increase in loan applications to purchase a motor vehicle,” Allen said.

Predictably, a slew of New Year resolutions gave a similar kick of health and fitness spending, while end of year festivities did the same for entertainment.

It would suggest that bars and restaurants will continue to enjoy a return in patrons in early 2021, along with things like art galleries, book stores and digital subscriptions.

While Australia is not in the clear just yet, it’s another positive sign according to Allen.

“While the situation warrants some caution, we continue to expect solid household spending and economic growth for Australia through 2021.”

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