Australian Credit Card Borrowers Becoming More Financially Savvy

Post by Sharat on February 7, 2018 · Under credit cards · Comment 

According to the latest data from the Australian Banking Association, there has been a reduction in Australian consumer credit card debt representing the third time this has happened in the history of the country. Despite the debt reduction, the total amount of outstanding consumer credit card debt is a staggering $52.2 billion. Tony Pearson Chief Economist for the ABA says that credit card holders are becoming more financially aware and are making sure they pay down debt and keeping their interest rate expenses low.

Paying down debt

According to Mr Pearson in 2017 Aussies spent approximately $325 billion using their credit card but paid back $341 billion which means they paid back $16 billion more than they spent. Australians also seem to be spending less with their credit cards according to data from the Australian central bank which suggests that card holders appear to be utilising just 34 per cent of their available credit limits which is the lowest level in 15 years.

Lower outstanding balances

Mr Pearson says that what this means in practice is that borrowers are now paying interest on smaller outstanding balances which means they are able to manage the cost of their credit cards better.  The fact that interest accrued on credit card debt is well below its peak level reached in early 2012 is evidence that Australians are becoming more prudent. Mr Pearson says it is important that Australians seek out the best deals when selecting a credit card and find one that best suits their needs by enabling them to keep track of their spending and stay on top of repayments.

Make use of balance transfer offers

If you are looking to pay down credit card debt, one way to do that would be to make use of a balance transfer offer which allows you to pay down the debt at a zero per cent interest rate for a fixed period of time. If you do decide to go down that road, then make sure you pay as much of the debt you have transferred off during the offer period and don’t use the card for additional spending because that would defeat the whole purpose of the exercise.

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