Credit card debt hits $49.3bn


New data from the Reserve Bank of Australia (RBA) has indicated that shoppers down under owe nearly $50 billion on their , amid concern that a growing number of people are struggling to cope with the cost of living.RBA statistics suggests that the total amount of credit cards debt has surged by 42 per cent since 2006 to reach $49.3 billion – almost as large as Australia’s entire national budget deficit and enough to pay off 170,000 average mortgages, according to both the  and  Blog.Deborah Southon of Debt Relief Australia told that many householders are stuck with more than one card, with over 70,000 individuals visiting her organisation’s website every year.”It’s not just the number of people who come to us for credit card debt resolution that’s alarming but the extreme level of debt they are in,” she explained. “Lives can be destroyed by credit card debt.”Ms Southon singled out providers for most of the blame, claiming firms have regularly found new ways to lure consumers to sign up for new credit card deals and commit themselves to paying off ever greater arrears.In addition, some companies are charging several times over the RBA’s official interest rate of 4.75 per cent – further adding to the worries of struggling cardholders. There are more than 14 million credit cards currently in use in Australia.With millions tempted by the offer of cut-price arrangements and seemingly low fees, Ms Southon added that it is easy to lose track of the actual cost of credit cards and pointed out that debt is the leading cause of relationship break-ups.Her sentiments were echoed by Ratecity chief executive Damian Smith, who noted that it is relatively easy to gain access to plastic, particularly in comparison to other widely-available forms of credit.Last week, Credit Agricole analyst James Ellis told AAP that the recent spike in bad debts could threaten Australian banks’ profitability over the coming years, with householders finding it increasingly difficult to pay off home loans.

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