Many Aussies have been struggling with their finances due to the rising cost of living, and a wave of new data from Finder’s analysis of Reserve Bank of Australia data has revealed that in the month of June alone, Australians put a record number of purchases on credit cards–a whopping 301 million purchases and a total purchase amount of $34 billion!

Australians have made a whopping $34 billion amount of purchases on credit in the month of June alone. Image source: jarmoluk on pixabay.

Finder credit card expert Amy Bradney-George gave a warning on putting items on credit and has attributed the rising credit card figures to the current cost-of-living crisis.

'We’re seeing an overreliance on credit as people struggle to manage the cost-of-living crisis,' she said.

'Emergency savings have been wiped in some households and expenses feel out of control.'

Before January this year, Australia’s total credit never reached $33.5 billion (an 8.4 per cent over the past year)–but now, it’s estimated at $40.5 billion.

Furthermore, according to research released last month, one in six Aussies is struggling to pay off their credit card debt–a figure that is likely to grow.

This could spell disaster if not managed carefully. Amy suggests another card as one way to ease the burden of repayment.

'Consider transferring your outstanding balance to a zero per cent interest balance transfer card and aim to make purchases only using a debit card until you can dig yourself out of the red. Focus on what is affordable for you, instead of spending unnecessarily,' she advised.

By transferring your debt to a card offering a 0% interest period (usually ranging from 6 to 24 months), you can focus on paying down your principal debt and without worrying about the accumulating interest.

And if you need a helping hand, Amy adds that it’s important to reach out for help rather than ignore the issue.

'If making repayments is difficult or causing stress, contact your bank or lender to discuss solutions. You can also get free financial counselling by calling the National Debt Helpline on 1800 007 007,' she concluded.

Understanding how to properly manage debt and use a credit card can be overwhelming. But with these added tips, overcoming financial challenges can become more manageable.

When it comes to credit cards, it's not about shunning their use completely. Credit cards can be an incredible tool for building credit, earning rewards, and making necessary purchases when cash flow is tight. It's all about conscientious spending, ensuring its use is within your budget and for a genuine necessity.

Beware of the minimum payment trap–while it seems like an ideal solution, paying the bare minimum each month can only increase your debt in the long term due to accrued interest. Strive to pay off more than the minimum required–ideally, the entire balance at the end of the month–to keep your credit score in check and save on interest charges.

Lastly, closely monitor your credit card statements. This practice can protect you against fraud and give you a view of your spending habits by seeing how seemingly small purchases can add up over time.

Key Takeaways

• Australians made a record 301 million purchases on credit cards in June, costing a total of $34 billion.
• This marks an 8.4 per cent increase in monthly credit card spending over the past year, raising the country’s total credit to $40.5 billion.
• Finder credit card expert Amy Bradney-George warned Aussies about relying too heavily on credit and suggested transferring outstanding balances to a zero-interest balance transfer card.
• She further urged credit card users facing difficulty in making repayments to contact their banks or lenders or seek free financial counselling by calling the National Debt Helpline on 1800 007 007.

Sharing is caring–if you have tips on how to manage credit card debt, let us know in the comments below!

 

[Leenie]

It is so easy to get into debt with credit cards ,don’t spend money you haven’t got. I refuse to have a credit card for that reason .

 

[Trudi]

I have two credit cards, one for $5,000 and the other for $5,500.

Since the pandemic I have not used any cash at all, although for groceries at Aldi, I select the "cash" option when I use my card which is linked to my savings account to avoid credit/debit card fees.

Both credit cards are paid in full each month.

 

[margaretritchie48]

I use my card as a convenience only. A lot of places now charge to use them so pay cash.

 

[MariaG]

We have used our card as a budgeting tool for many years.
You have to be disciplined and ALWAYS pay the total amount every month to avoid any interest.
One thing a lot of people may not know. When someone does not pay the total for the month, they will pay interest. however, not just for the month. I had a situation where I entered a 2 instead of a 3 and was $20 out on the total monthly payment. I always check the statement to compare against a spread sheet I keep. I noticed the $20 shortfall and paid extra immediately to cover it.
The following month, there was a other interest charge (not much $ wise, but it was still there). So, I called the bank. Their response was that when you do not pay the total for the month, you will be charged interest for 12 months thereafter, even if you pay more to compensate.
After I chucked a loyal 30 year customer hissy fit, they relented and refunded all interest charged because they are so very nice.
I have learned my lesson and double checked the arthritic data entries with more diligence. It can be a very costly trap if a larger under payment is involved.