Australia’s total credit card debt attracting interest charges has dropped for the first time in six months, as households finally start to reign in their burgeoning credit card debts.
The latest RBA credit card statistics released for the month of May show Australia’s total credit card bill attracting interest charges is now $17.61 billion – a drop of $83.9 million from the previous month.
While the country’s total credit card debt is still way too high, the drop is likely to be the first inroads many families have made this year into reducing this toxic debt.
RateCity.com.au research shows that in the month of May alone, Australians collectively were charged $275 million in credit card interest from lenders.
RBA: credit card debt attracting interest charges (excludes commercial cards)
| Amount owing - May 2024 | Monthly change | Year-on-year change |
| $17.61 billion | -$83.9 million -0.5% |
-$158.7 million -0.9% |
Source: RBA, released 8 July 2024, original data, excludes commercial cards.
Average credit card interest rate hits record high
The average credit card interest rate of those balances attracting interest charges hit a new record high in May 2024 of 18.39 per cent, according to the latest RBA data.
Average rate of credit card balances incurring interest: RBA
This broken record comes as no surprise.
RateCity.com.au research shows all four big banks have increased the interest rates on select credit cards since August of last year.
- 25 August 23: CBA hikes the rate on its Low Fee card by 0.75% pts.
- 7 September 23: ANZ increases the rate on all credit cards, in one case by up to 1.25% pts.
- 1 November 23: CBA raises the rates on select credit cards by up to 1.25% pts.
- 13 February 24: NAB hikes select credit card interest rates by 1.00% pts.
- 22 February 24: ANZ hikes the rates on select cards again, this time by 0.50% pts.
- 20 June 224: Westpac hikes interest rates on its rewards and low fee cards by up to 1.25% pts.
Credit card accounts continue to rise
After a drop in April, the number of credit card accounts rose again in May – the 19th time in the last 20 months.
Number of credit card accounts: May 2024 (commercial cards excluded)
| Amount | Monthly change | Year-on-year change |
| 12.68 million | +3,867 +0.03% |
+105,480 + 0.8% |
Source: RBA, released 8 July 2024, original data, excludes commercial cards.
RateCity.com.au research director, Sally Tindall, said:
“Today’s RBA data is a glimmer of hope that the battle against rising credit card debt can be advanced, even amidst an inflation crisis.
After watching credit card debt tick up for five months in a row, it’s fantastic to see the needle finally move in the right direction.
The latest RBA data shows borrowers with credit card debt are now paying an average rate of 18.39 per cent – the highest in the central bank’s records.
Credit card interest rates don’t typically rise and fall in lock step with the cash rate, but over the last year we’ve seen not just one, but all four big banks quietly raise the interest rates on select cards.
If you’ve got credit card debt, take action by making sure you’re on the lowest interest rate possible and make a plan that puts a priority on paying back this debt in full.
Tax time is the perfect opportunity to take an axe to your credit card balance, for those expecting money back on their return.
The start of the stage three tax cuts and the energy bill rebate will also help inject space into household budgets, giving those with credit card debt the chance to make even greater inroads.
Credit card debt is toxic, the sooner you can eradicate it from your budget, the better off you’re likely to be financially,” she said.
