Australians write off $ 4.2 billion in credit card debt since COVID

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Australians have written off a staggering $ 4.2 billion in national interest-bearing credit card debt since the start of the COVID pandemic.

New figures released today by the RBA show that since March, interest-bearing credit card debt has fallen 16% to $ 22.79 billion, the lowest total since October 2005.

During that time, nearly 400,000 credit card accounts have been closed.

Pre COVID (March) June 20, 2020 Change since COVID-19
Number of accounts

13,641,553

13 268 098

-373 455

-3%

Total interest-bearing balances

$ 26.98 billion

$ 22.79 billion

– $ 4.2 billion

-16%

Notes: Excludes commercial cards, using original RBA data. Data published on August 7, 2020.

Credit card trends

Year over year, interest-bearing debt fell by $ 6.5 billion, while the number of credit card accounts fell by 1.31 million.

However, month over month Australians spent $ 3.46 billion Following on their credit cards in June compared to May, the 20% increase is likely due to the lockdown being lifted across much of the country.

May 2020 vs June 2020 June 2019 vs June 2020
Number of accounts

– 133, 738

-1%

-1.31 million

-9%

Total interest-bearing balances

– $ 995 million

-4%

– $ 6.5 billion

-22%

Total value of transactions

+ $ 3.46 billion

+ 20%

– $ 783 million

-4%

Notes: Excludes commercial cards, using original RBA data. Data published on August 7, 2020.

Sally Tindall, research director at RateCity, said it was positive to see so many Australians continue to write off their debt during the pandemic.

“Since COVID hit in March, Australians have wiped nearly $ 4.2 billion off their credit cards – it’s a record-breaking effort that will save some families hundreds of dollars a year in interest.” , she said.

“Credit card spending rose in June as people walked to stores after weeks of foreclosure. Yet despite this, the total debt accumulating interest continued to decline as many families focused on getting back into the dark where they could.

“The pandemic, as terrible as it is, has forced thousands of households to reassess their budgets and write off their debts.

“They are doing it by any means possible, including using their super

“If you’re someone who has successfully wiped out your credit card debt during COVID, try to keep it that way. Paying off credit card debt isn’t a lesson you want to learn twice, ”she said.

Pay off your credit card debt

Looking to pay off your credit card debt during COVID-19? It may be worth considering switching to a balance transfer card. This allows you to transfer your existing debt to a new card at zero percent interest for a set period of time. For cardholders struggling with debt, this can provide much needed leeway.

Keep in mind that any new payments you make to your balance transfer credit card will immediately start earning interest. It is recommended that you put your balance transfer card in the freezer while reducing your debt so that you don’t be tempted to add more.

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