This article shows the astounding level of credit card debt owed by ordinary Australians. It uses the MoneySmart debt clock to explain the debt and associated interest and what it costs on the average card balance if only the minimum repayments are made. It is an excellent reminder of how expensive credit cards can be if not managed properly.
There is a fascinating page on ASIC’s MoneySmart website. A “Credit Card Debt Clock” (https://www.moneysmart.gov.au/borrowing-and-credit/credit-cards/credit-card-debt-clock) that displays in real time how much Australians owe on their credit cards. When we started writing this article it was up to $31,591,800,000 in outstanding debt with an astonishing amount of around $5,313,800,000 per annum owed in interest! That’s over thirty billion dollars in credit card debt with an annual interest bill of nearly five and a half billion dollars! At time of writing this represents just over $4,290 per card holder in Australia.
You might be wondering why is there nearly $5,400,000,000 owing just in interest on Aussie’s credit cards – read on and all will become abundantly clear.
Will you still have your credit card purchases in thirty years?
If you have $4,400 of credit card debt and only make the minimum repayments, it will take you 31 years to pay it off and cost you around $14,900 in interest. But if you pay off $216 each month you’d pay off your debt in 2 years and save almost $9,700 in interest.
So the best plan of attack is to pay as much as you possibly can every month – preferably the entire balance.
Many people think they will be able to control their credit card debt, but as you can see, when it comes to compounding interest, a small balance can quickly get out of hand.
Whether you just have a few hundred owing on your card or many thousands, here are some simple steps to get you started paying off the debt.
If you have a credit card debt around the average Australian balance and are struggling to get on top of it, please seek professional advice. Acting early will save you many thousands of dollars – not to mention your credit rating.