A sense of urgency to pay down home loans ahead of rate hikes combined with low personal savings is seeing many Australians embrace credit cards as a means of meeting everyday expenses, new data suggest.

The latest quarterly Household Financial Wellbeing Index compiled by ING Direct found the median card debt rose by 24 per cent over the last quarter as home owners are showing grim determination to get ahead with their mortgage - 49 per cent of mortgage holders are making additional payments on their loan, up from 48 per cent in Q2. Correspondingly, the median outstanding mortgage balance has dropped from $175,509 in Q2 to $174,959 in Q3.

However additional loan payments are consuming valuable disposable income, and faced with increases in basic living costs, credit cards are being used to full the cash gap.

Outstanding card debt has grown alarmingly, with the median balance rising from $1,673 in Q2 to $2,072 in Q3 - a leap of 24 per cent. Not surprisingly, comfort levels with short term debt have slipped from 5.8 (out of a possible 7) in Q2 to 5.71 in Q3.

More Australians also embraced credit cards, with only 10 per cent of households living without credit cards in Q3, down from 12 per cent in Q2.

Cardholders who were struggling with card debt in Q2 found things even tougher in Q3. Around 14 per cent of households said they are 'very uncomfortable' with card debt. Among these respondents, the median credit card balance has skyrocketed from $6,592 in Q2 to $8,494 in Q3, an increase of almost 30 per cent.

ING Direct CEO Don Koch believes the situation is potentially dangerous.

"Households are taking the right approach by aiming to pay off their loans early and avoid dipping into savings. But the over reliance on credit cards is a worrying trend," he said.

"Home loans are underpinned by an asset that will rise in value over time. The same cannot be said of card debt. The higher interest rate applicable to credit cards will see many families burdened by growing interest charges. This is detrimental to short term financial wellbeing, but in the long run it can create a devastating debt spiral."

Mr Koch urged home owners to focus on reducing card debt ahead of their mortgage as cards come with a far higher interest rate.