Real Credit Card Borrowing in Australia
There is often a lot of talk about Credit Card debt in Australia, and the figure being headlined in Newspaper Reports is often the total of all Credit Card Balances and not the real debt.
How many of us use a credit card to purchase most things, but pay the card off in full at the end of each month, without incurring interest?
Do we call that debt? After all, we have the money in the bank to cover it when the bill comes in.
Total Credit Card debt in January 2016 is shown as $50,897 million
Balances accruing interest is only $32,383 million.
It seems that $18,514 million of those balances are paid off before the statement date. That’s about 36% of all balances are paid off before Statement date.
In January 2013 it was 26.2%
January 2014 it was 30.9%
January 2015 it was 34.5%
January 2016 it was 36.4%
Reserve Bank information in credit card usage shows the following movement during the last 8 years
Month-Year : Balance in $m’s, at end of that month.
Jan-2003 : $16,682
Jan-2004 : $18,508 an increase of 10.95% in 12 months
Jan-2005 : $21,210 an increase of 14.60% in 12 months
Jan-2006 : $24,732 an increase of 16.61% in 12 months
Jan-2007 : $28,355 an increase of 14.65% in 12 months
Jan-2008 : $30,658 an increase of 8.12% in 12 months
Jan-2009 : $32,240 an increase of 5.16% in 12 months
Jan-2010 : $33,785 an increase of 4.79% in 12 months
Jan-2011 : $36,017 an increase of 6.61% in 12 months
The rate of increase slowed down considerably from 2007, although appeared to pick up again in 2011, with people appearing to be using their own money, in preference to Credit Card borrowing, during the Global Financial Crisis, but appears to be picking up again, albeit still slower than the increases during 2003-2007.
Jan-2004 $18,508 an increase of 10.95 % in 12 months
Jan-2005 $21,210 an increase of 14.60 % in 12 months
Jan-2006 $24,732 an increase of 16.61 % in 12 months
Jan-2007 $28,353 an increase of 14.64 % in 12 months
Jan-2008 $30,658 an increase of 8.13 % in 12 months
Jan-2009 $32,239 an increase of 5.16 % in 12 months
Jan-2010 $33,783 an increase of 4.79 % in 12 months
Jan-2011 $35,864 an increase of 6.16 % in 12 months
Jan-2012 $36,939 an increase of 3.00 % in 12 months
Jan-2013 $35,956 a Decrease of 2.66 % in 12 months
Jan-2014 $34,122 a Decrease of 5.10 % in 12 months
Jan-2015 $32,820 a Decrease of 3.81 % in 12 months
Jan-2016 $32,383 a Decrease of 1.33 % in 12 months
The rate of increase slowed down considerably from 2007, where it had been increasing each year by over 15%, although there were signs of an increase again in 2011. when it appeared to pick up again, when looking at the January 2011 numbers. However, that was just a slight blip upwards, before falling again, and from 2013, the total figure was no longer increasing but actually reducing,
People do appear to be using their own money in preference to Credit Card borrowing, or it could be that they are using alternative, and cheaper borrowing methods.
A government report in early 2016 stated: With around $32 billion owing, that’s an average of around $4,300 per card holder.
The calculation for that is:
$32 billion equals 7,500,000 card holders at $4,300 debt each.
In January 2007 the average balance per card was $2,896, and has risen to $3,114 in January 2016
In January 2007 the average balance accruing interest per card was $2,138, and has dropped to $1,981 in January 2016
There were 13,260,000 Credit and Charge cards in January 2007, and this has risen to 16,343,000 in January 2016
Number of cards has risen by 23.3% from 2007 to 2016
Total balance per card has risen by 7.5% from 2007 to 2016
Total balances accruing interest per card has dropped by 7.3% from 2007 to 2016