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CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Wednesday, 5 April 2017

Record credit card debt (or not?)

For the record

A phrase that seems to be getting bandied around a lot lately: "record credit card debt", without any real clarification of what that actually means.

Seems odd, certainly, given that personal credit growth has fell to zero in 2015 and has been reported as negative for more than a year (which itself is extremely unusual). 

I thought that I'd take a look at the statistics to find out for myself.  

And for the total value of credit card balances accruing interest the Reserve Bank of Australia (RBA) says...nah.


In fact the Australian population has grown substantially over the last decade from about 20 million, to 24.42 million today.

And in turn the statistics show that the average credit card balance accruing interest has fallen by more than 20 per cent since April 2012.


Interest rates are typically lower today too, with somewhat smarter consumers around these days (well, some of them are a bit smarter anyway). 

The proportion of credit card limits used recently dropped to its lowest level in 14 years. 


More folks today are also, quite wisely, deciding to use offset accounts to build up mortgage buffers.

So, it's a resounding no to record credit card debt.

Of course, the story is never quite as black and white as this.

For one thing, I expect that personal bankruptcy is rising sharply in Western Australia and regional Queensland, which is never going to be well captured by raw credit card figures. 

And it's also possible that the RBA isn't capturing various new sources of personal credit in its data. 

Still, I've looked and I can't find any substantiation for record credit card debt, unless there are some other figures I don't know about.