Australians Pay Off $18.8 Billion in Credit Card Debt

Reddit

Moving from the mineral world to the world where you try and get rich buying things, will it be paper or plastic? Plastic!

Australians made $17.9 billion worth of purchases using their credit cards, according to Reserve Bank figures released yesterday. The total number of purchases using credit increased by 17% for the month. The number of cash advances—where the interest rate is usually higher—also increased by about 15% to over $1 billion.

On the flip side, credit card payments were $18.8 billion in October, a 14% increase from the month before. And this is good news, According to CommSec economist Craig James. “It’s clear that Australians are using their credit cards more often but more wisely. The conventional wisdom is that consumers are drowning in a sea of credit card debt. But the evidence is totally to the contrary.”

It’s certainly good that Aussies are paying off what they’ve borrowed. But if you’re borrowing to make ends meet, or to live a lifestyle which the TV teaches you to be accustomed…well that’s a problem. No one has ever spent their way to wealth, at least not that we know of.

Dan Denning
The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
Reddit

Leave a Reply

9 Comments on "Australians Pay Off $18.8 Billion in Credit Card Debt"

Notify of
avatar
Sort by:   newest | oldest | most voted
Rob of Brisbane
Guest

hi Dan

I have a question for you and your colleagues at the hold hat factory.
How many jobs have been created by $43 billion worth of credit card debt?
I guesstimate some 400,000 plus jobs.
What is your opinion on this?

Brian
Guest

Hi Dan,

I don’t follow Rob from Queensland’s logic!

If the people used cash to buy the goods instead of credit, the people would still have their jobs, but wouldn’t be so busy.

As there would be less demand for goods and services, prices would be lower.

If one follows Rob’s logic, then we should all go out and spend and we will soon achieve full employment. All we need is another $30 Billion in debt and we would be there!

christina
Guest
I work in a shop, and an old man came up to me asked me (sarcastically) “Exceuse me, but do you still accept cash?” and I go “yeah, why?” and he says “Oh, its just that so many people on every register in this shop are paying by credit card and making the lines go slow, so I thought that the shops musn’t accept cash any more” He made his point perfectly, don’t you think? Anyway, if you want to see something else to really freak you out, do a google search on the words “christmas 1928” and click on… Read more »
gordon
Guest

I read where Americas total income is around 2.7 trillion and it’s total liabilities could be between 50 & 60 trillion, what are the comparitive figures for Australia. I know our debts are climbing but don’t know what the important figures are?

Danny in Perth
Guest
To Rob of Brisbane: I feel tempted to answer your question although I don’t have any relation with this publication. I merely visit this website occasionally looking for an interesting read. You ask a pretty open ended question there. I’m not sure how you arrived at the 400,000 new jobs figure from the extra credit card debt. Credit isn’t necesarily bad as long as it is maintained within a managable level. Credit card debt contributes to the overall level of credit and I believe the current level of 160% of household income may be too high. this should also leave… Read more »
kage
Guest

Debt is Debt.
Can it create jobs ? Yes, but very inefficiently, while boosting inflation.
What happens when you are unable to pay it back ? Borrow more ? What if the lenders stop lending to you ? Goodbye jobs.

FriedBourbonnCoke
Guest
The way this has been achieved is by banks limiting the amount of cash you can withdraw without seeing a teller… it has been socially engineered to take longer to get enough cash. Credit however only has the limit you put on it(I lowered mine intentionally to inhibit fraud). This way the banks get to charge the customer at least twice a transaction… the maintenance fees plus the fee they charge the merchants(passed along of course) and then a couple of hidden fees for using each others electronic systems. Managed sensibly(and keeping in mind the real meaning of 30 days… Read more »
mike
Guest

If 100 credit-thirsty bathers jump into a swimming pool and start drinking the water….tell us.. rob of brisbane…. will the waterline rise or fall…

Gary
Guest

kage has hit the nail on the head here. There’s a limit to the employment produced by debt. One day borrowing will hit a low and where will we be but unemployed and massively in debt? A definite bone of contention here.

wpDiscuz
Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
If you would prefer to email the editor, you can do so by sending an email to letters@dailyreckoning.com.au