About the study
Money commissioned an independent survey of 732 credit card holders to gauge whether Aussies were still paying off last year’s credit card debt in 2020, as well as how long it would take for them to clear their debt.
The survey also sought to uncover credit card habits such as the main expenditure categories from which Aussies are incurring debt, how much interest consumers are paying across all their cards, and whether their credit card debt is worsening.
High levels of credit card debt can have a negative impact on an individual's credit score, and could be a real issue if the person applies for a home loan down the line.
Are Aussies in a micro-debt crisis?
By July, more than a third (38%) of credit card holders will still be paying off their credit card debt incurred last year. Concerningly, one in five (21%) credit card respondents – and 25% of those in their 40s – won’t pay off their debt this year at all.
What accumulative credit card limit do Aussies have across all their cards?
More than a third (37%) of credit card holders have a credit limit of $10,000 or more across all their cards, and 60% have a limit of at least $5,000. Specifically, a quarter (24%) of credit card holders have a limit of $2,000-5,000, 23% of respondents’ credit cards sit at an accumulative total limit of $5,000-10,000, and 17% have a card limit of $10,000-15,000 across all their cards.
More older Aussies have a credit card limits of $10,000 or more across all their cards: 43% of over-60s have this level of limit, compared with an equal 36% of those in their 40s and 50s. Meanwhile, younger credit card holders are more likely to have a lower credit limit across their cards, with 50% of under-30s having a total credit limit of up to $5,000.
How much credit card debt did Aussies rack up last year?
The majority of debt Aussies had accumulated on their credit cards when their debt was at its highest was relatively low: 39% said less than $2,000, and 68% said up to $5,000. Just 9% had accumulated more than $10,000 in card debt. Specifically, 29% racked up $2,000-5,000 worth of debt, and 12% had $5,000-7,000 at any one time last year across their cards.
Older Aussies are more likely to be on the lower end of the spectrum with their credit card debt. 79% of over-60s had a combined card debt of up to $5,000 last year at any one time. This compared with 57% of 30-somethings and 64% of under-30s. Meanwhile, Aussies in their 30s had the highest total debt across all their card at any given time last year, with 14% having a debt of $10,000 or more.
Across the states, more South Australian credit card holders had up to $5,000 in debt before the pandemic than any other state, at 81%. This compares with an equal 68% of NSW, Victorian, and Queensland card holders.
What are the big-spending categories for credit card debt?
Nearly half (48%) of respondents admitted that the major expenditure category causing their credit card debt is essential purchases. Groceries and essentials are the main category incurring debt for 28% of credit card holders, while 20% say their debt is from insurance, internet, phone, energy and other utility bills.
Nineteen per cent (19%) incur most of their card debt from holidays and leisure activities, while 9% said it is due to entertainment and dining.
The major expenditure category incurring card debt for under-30s is holidays and leisure activities, with 28% admitting this. This compared with 16% of over-60s and 12% of respondents in their 40s. Meanwhile, groceries and essentials is the major category incurring debt for the other age groups: 34% of those in their 30s, 32% of those in their 40s and 26% of those in their 50s.
Across the major states, the biggest non-essential spending categories tend to vary. ACT residents incur the most debt on entertainment and dining (chosen by 23%), NSW and Victorian residents accumulate debt from holidays and leisure activities (21% and 20%, respectively).
How much interest are Aussies incurring across their credit cards?
Aussies struggling to stay on top of their credit card debts are also getting hit with interest that can stack up significantly over a 12-month period. The survey results show that nearly a third (31%) of credit card holders pay at least $360 a year in interest, on average. 18% pay an average of at least $600 each year on interest, while a concerning 8% pay $1,200 or more each year.
The results show that 30-somethings are more likely to pay nearly $1,000 at minimum on interest: 13% pay $960 or more a year across all their credit cards. On the other hand, seniors are keeping their purse string tight when it comes to paying interest, with 77% saying they pay less than $120 a year across all their cards.
Will Aussies ever be able to pay off their debts?
Money asked respondents if they had ever felt they would not pay their debts off completely. The results reveal that a third (34%) of credit card holders felt it would take at least a year to pay off last year’s debt. Specifically, a quarter (25%) felt that it would take at least two years to pay off, while 13% felt they would never be rid of their credit card debt.
Of concern, younger Aussies seem to feel more trapped by their credit card debt, with 50% of those under 30 and 49% of those in their 30s feeling as if they will never pay it off. This compares with just 17% of over-60s.
Is our micro-debt crisis getting worse?
Concerningly, one in five (20%) of Aussies felt their credit card debt was getting worse, with almost a quarter (24%) saying they didn’t think they could make ends meet on a weekly basis without a credit card.
The results show that younger Aussies are more likely to have debt piling up, with a third (34%) of those aged 18-29 and 32% of those in their 30s saying they feel their credit card debt is getting worse. This is compared with 22% in their 40s, 16% of 50-somethings, and 9% of over-60s.
How could Aussies try to avoid high-interest rates from credit cards?
Watching interest stack up on credit card debt can be concerning, but have you ever considered transferring that debt onto a personal loan with a lower interest rate? This is a common alternative to doing a credit card balance transfer to a different credit card.
Almost a third (32%) of Aussies overall – and 49% of those aged between 18-29 – said that when their card debt was at its highest, they would have considered it.
Older Aussies, on the other hand, are far less likely to take out a personal loan in this situation. Most (91%) of those over-60 and two in three (69%) in their 50s years saying they wouldn’t consider doing so.
