Australians set new record highs for debit and credit card transactions in November, posting the highest amounts since reports started in 2002, according to the Reserve Bank of Australia (RBA).
The country was fresh out of lockdown in late October, inducing a nationwide shopping spree as consumers were eager to spend untouched budgets on pre-Christmas sales. Even those who remained cooped up at home had temptations of their own as Click Frenzy, Black Friday and Cyber Monday took the online retail scene by storm.
The result? Over $43.01 billion and $25.7 billion were spent on personal debit cards and credit cards, amounting to a grand total of $69 billion worth of national transactions. Sally Tindall, research director at RateCity, said this consumption boom was short-lived, with the sudden wave of Omicron disrupting newly opened businesses.
The value of transactions isn’t the only thing on the rise, however. Debt accruing interest on credit cards has gone up by $74.8 million month-on-month.
In 2020, RBA reported a 20% reduction in credit card debt since the start of the pandemic, while half a million credit card accounts were closed over four months. Lockdowns had credit card debt kicked to the curb, but it shot back up in the two months since restrictions eased.
“The issue for many Australians who overspent on their credit cards or buy-now-pay-later accounts is that they may now have trouble paying it all back,” Tindall said. “Credit card debt accruing interest has gone up for the first time in six months, as some Australians dusted off their wallets and abandoned their thrifty COVID ways.”
Interestingly, the number of credit card accounts was the lowest since December 2006, but its purchases and transactions were the highest on record. This means much higher expenses for the average card holder.
“This problem could get worse over the next couple of months, especially for people impacted by COVID who haven’t worked the hours they were expecting to,” Tindall said. “Anyone struggling to make their credit card or buy now, pay later repayments should call their provider and ask for help before getting stung with late fees and interest charges.”