New research has revealed a worrying number of Australians increasing their credit card limit for more spending for the holiday season and that more than one-fourth of Australians are expecting to accumulate debt after the holidays.
Canstar surveyed 3,199 Australians and found 28% are expecting an average debt of $825 after the holidays, as they plan to spend on presents after essentials, including housing, insurance, bills, food, and clothing. More than half (55%) of those expecting to accumulate debt have a credit card. Of these, 8% don’t have an existing debt on their credit, while a staggering 92% say they do. When asked how close they are to their limit on their credit card, 25% said they are already at their limit. Almost one-fourth (24%) said they have increased their credit limit to cater for more spending.
Steven Mickenbecker (pictured), group executive for financial services at Canstar, warned about spending using credit cards.
“Christmas is a time for family and celebration, but this time of year can also add to a family’s financial stress if they spend money they don’t have,” he noted.
According to Mickenbecker, credit cards are the largest source of personal debt, and at the end of October, the amount accruing interest grew to $17.4 billion, up by $516 million year over year.
“Considering the inflation rate started the year at 7.8%, the almost 3% increase in debt is modest,” he said. “Australians have kept a lid on debt in recent years, but it’s being blown off this Christmas by more than a quarter of Aussies who are adding festive spending, on top of their regular bills, to the tab.”
He advised credit cardholders to let their provider know if they are not seeing a “clear way out of debt”. “The National Debt Helpline is also a source of support and provides advice and guidance on how to approach clearing debts and getting back on track,” said Mickenbecker.
Canstar also shared some ways to avoid credit card debt:
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