Australians’ credit card debt hits $51.3 billion for groceries & utilities

Out of the $1.45 trillion personal debt that Australians owe to banks, $51.3 billion is to pay for their weekly groceries and utility bills. The rising level of debts, which Prime Minister Malcolm Turnbull also warned in mid-September, indicates the debt cycle that a lot of people could no longer get out.

In a survey of over 2,000 Australians, finder.com.au, a financial comparison website, found that 25 percent off all credit card spending went to groceries, 16 percent to utility bills, 16 percent on general shopping and 10 percent on entertainment. By opting to swipe rather than pay with cash, Australians are making it more difficult to monitor their spending.

“The downside of this is that when you spend on a card, it’s easy to overspend as you are not limited by a cash amount in your wallet,” News.com.au quotes Lisa Montgomery, a consumer finance expert. The acceptance of consumer practice to charge purchases to credit cards is seen in an RFi study on the evolution of global payments in which 40 percent of Australians foresee the country becoming a cashless society.

Purchasing on credit, however, is more expensive since the average credit card company charges an interest rate of 17 percent, although it could go up to almost 30 percent. There are some credit card owners who could pay their dues monthly and escape being charged interest, but many could not, resulting in card debt accruing interest reaching over $32.1 billion.

The average debt of a credit card holder in Australia is $3,095, of which 63 percent accrue interest, adds Bessie Hassan, spokesperson of finder.com, Startsat60.com reports. She points out that with grocery items already expensive even without interest, consumers could reduce their credit spending by setting a budget for their weekly grocery shopping paid in cash.

VIDEO: Financial Advice Australia – How to pay off your credit card debt fast

Source: Australian Financial Advice