April 23, 2007
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NEWS: Australians Gain DebtCommSec's lead economist, Craig James, stated recently that many Australian families are finding themselves in unprecedented levels of debt after interest rates skyrocketed lately. James thinks that the situation could get worse before it improves. He posits that many marginal borrowers are nearing dangerously to their max limits, prompting some pretty dire decisions about their budgets and spending habits. If it was just one more month of increases, people might get by, said James. But more than that, and the situation might become perilous.
It wasn't a surprise that the Reserve Bank raised interest rates in May of last year, said James. But the second and third subsequent rise took experts – and, more importantly – consumers by surprise, he said. The consecutive rises may have led to consumers being strapped for cash, and holding larger amounts of debt on their cards for longer periods of time, he said.
The average Australian's credit card debt load is just under $3,000, which adds up to a total debt of $28.6 billion on all consumer cards in the nation. The average cardholder only has 38.2% available credit, which is the highest that number has been since record-keeping began in 1985.
Australians are big fans of plastic; even more so than in other countries. Ten years ago, there were 3.7 million credit cards in the country. Today, that amount has ballooned to 13.4 million.
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