While retail is floundering, manufacturing is dying and new housing credit is falling we note that Australians are still maxing out their credit cards, and when they have, they are just getting a new one.
Australians have racked up a record $48.8 billion in debt on credit cards while banks wring hard-pressed families with interest rates higher than we have seen for nearly 20 years.
According to new figures, Australians are sinking into record levels of credit debt, often being lured to spend more with bank loyalty programs or special offers.
We now collectively owe close to $49 billion, having been approved for 14.8 million credit cards — more than ever before.
More than two-thirds of this bill, or $35.5 billion, is accruing interest every day at an average rate of 19.7 per cent per annum — near a 20-year high, according to the Reserve Bank of Australia, which collates the figures.
Just so we are clear, that is approximately $3300 for each of those 14.8 million cards and approximately $2200 of credit card debt for every single Australian.
With retailers complaining about Christmas trade, you do have to wonder where all that debt is going. It is well know that mortgages deliquencies are on the rise, and a fair sign of someone in mortgage stress is a steady increase in credit card debt, as their income cannot cover the living expenses. The new year is usually the time when the problems appear, as we said back in December.
What is worse for these number is that it is Christmas time. The time of year when the indebted grit their teeth and attempt to put on their best Christmas for their kids and to keep up appearances for their family.
Who wants to turn up at Christmas dressed in a Scrooge or a Grinch outfit? Showing signs that their financial position is about to explode in their face. People put on a happy face while hoping for a christmas miracle come new year.
The problems actually begin to appear in January, when the reality of the debt slaps people in the face. The Christmas costs appear and the credit card bill is received in the mail.
And the article has some amazing examples of this.
“Banks and other lenders design credit cards to get people in debt, and try to focus their mind on things other than the fact they are in debt. They make them think about reward points and special offers and the like.”
CEO of Nobankruptcy.com.au Christian Oey said: “Our inquiry rate has doubled since this time last year. Usually we don’t start to pick up the pace until February, when people get their credit card statements after Christmas.”
Mr Oey said the average debt was much higher this time around. “Our average already is about $90,000 per client on credit cards. One client owes $560,000 on credit cards. Some clients have 25 accounts,” he said.
“You’ve got to ask why the banks keep lending.”
Yes you do.
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