Rising Credit Card Debt Sends a Warning to Borrowers

The concern is not just the balance itself. Canstar estimates Australians are collectively paying about $10 million a day in credit card interest, based on an average purchase rate of 18.61 per cent. That is an expensive form of debt compared with many structured loan products, particularly where borrowers are only making minimum repayments and allowing interest to compound.

Spending behaviour also matters. Total card transactions across credit and debit cards reached $89.5 billion in May, the second-highest level on record. Credit card spending alone rose by $1.1 billion over the month to $29.9 billion. While using a card is not automatically a problem, carrying a balance from month to month can quickly turn everyday spending into a drag on cash flow.

For borrowers, this has a practical implication: credit card limits and unpaid balances can affect how a lender views your ability to service new debt. Even if a card is not fully used, many lenders assess the risk attached to the available limit. Reducing limits, clearing balances, or consolidating costly debt may improve the shape of an application, but only when the replacement loan genuinely lowers costs and supports a realistic repayment plan.

This is where structure becomes important. A debt consolidation loan can simplify multiple repayments, but it should not be treated as a reset button for further spending. Borrowers should compare the interest rate, comparison rate, fees, loan term and total repayable amount before switching. Extending debt over a longer term may lower monthly repayments but can increase the total interest paid.

If card debt is starting to interfere with your savings, mortgage repayments or business cash flow, it may be time to model repayments and compare options before applying for further credit. The key lesson from the latest figures is clear: high-interest revolving debt can quietly reduce financial flexibility, so getting it under control early can strengthen both household budgets and future loan applications.