Credit card spending has reached record levels in Australia as disposable incomes dry up, according to new research by Finder.
Monthly purchases on credit cards reached a record-high $33.5 billion in January, according to data by the Reserve Bank of Australia (RBA) – a whopping 17 per cent increase over the year and an extra $4.9 billion put on plastic in 12 months.
Soaring cost-of-living pressures were the likely contributor, with one in two Aussies currently experiencing financial stress.
Finder’s Cost of Living Report 2023 revealed one in four Australians said they couldn’t manage their finances without a credit card.
This figure has been on the rise over the past two years. In May 2021, just one in five (18 per cent) felt this way.
Finder credit card expert Amy Bradney-George said a growing number of Aussies were using credit cards to buy things they couldn’t pay for with cash.
“As prices continue to rise, consumers are depending on credit cards more – including to pay for essentials like food and utilities,” Bradney-George said.
“With outstanding balances creeping up, households might quickly find themselves unable to pay back the debt they’ve accumulated.
“There is a very real risk that relying on a credit card, or any form of credit, to cover these costs will lead to interest charges and further debt.”
Finder research of 1,310 workers in February and March 2023, found that 49 per cent said they could only live off their savings for a month or less. Even more startling, 16 per cent of workers said their savings would last less than a week.
Bradney-George said a worrying number of families were living pay to pay.
“The squeeze on finances is alarming for households across the country, especially those who have limited savings or other funds to draw on,” she said.