Australia’s credit card debt at four-year high as households struggle under cost-of-living pressure

Australia is facing a fresh wave of financial strain as total credit card debt climbs to its highest level in four years — a stark signal that many households are increasingly relying on plastic to get by.

Credit card balances surge as interest-bearing debt hits record levels

Recent data show that interest-accruing credit card debt on personal cards has risen to approximately A$18.4–18.5 billion, the largest amount since mid-2021.

This uptick comes after consistent monthly increases — debt accruing interest rose by A$530 million in September alone.

At the same time, broader personal debt is ballooning: a recently published report estimates that in 2025 the typical Australian now carries around A$17,634 in non-mortgage debt, up from A$15,179 in the previous year.

For many, that means the plastic in their wallets is less a convenience and more a lifeline — but one that comes with costly strings attached.

Who’s carrying the burden — many, across age groups, but young middle-income households are vulnerable

Analysts and recent surveys indicate that the surge in debt is spread across demographics, but some patterns stand out:

• Roughly 36% of credit card holders (about 2.44 million Australians) do not pay off their balance each month, carrying forward a “revolving balance.”
• Among those, the median amount owed is about A$1,037 each month — but for households with heavier living costs (renters, mortgage-payers), the amounts are significantly larger.
• A worrying 423,000 card-holders (around 2% of all adults) carry balances greater than A$5,000 — a size where interest costs become particularly punishing.

Adding to the pressure, many have turned to “buy now, pay later” (BNPL) services in addition to cards: among card-holders renting or paying mortgages, a notable fraction report also using BNPL — suggesting layers upon layers of unsecured debt.

Macro pressures — why debt is rising

Several factors appear to drive this increase in credit-card debt:

• Rising cost of living: Inflation, higher rents and mortgage repayments, and elevated utility bills squeeze household budgets; credit cards fill the gap. Recent increases in household spending show that many are still consuming — even while carrying debt.
• High interest rates: The average annual interest rate on outstanding credit-card balances remains near 18.6%, meaning unpaid balances quickly balloon.
• Deferred repayment: Even though the total value of spending on cards remains high, fewer people are clearing their balances — leading to a rise in interest-bearing debt.
• Debt fatigue: Many households facing stretched finances may find minimum repayments themselves challenging, increasing reliance on minimum payments and rolling balances forward.

Financial-counseling groups warn this can create a cycle of debt: high interest, compounding balances, and growing financial stress.

Warnings and official response — watchful eyes on lenders and regulators

The surge in debt has already triggered official concern. A parliamentary inquiry has been launched into the practices of credit card and digital wallet providers, led by a government MP.

Analysts say the inquiry is timely — highlighting the growing number of consumers who might be slipping into long-term unsecured debt, with little margin for error if interest rates rise again or incomes stagnate.

Some advocacy groups have called for stricter regulations on interest rates, clearer disclosure of repayment costs, and better consumer education, especially around minimum repayments and “buy now, pay later” stacking.

Meanwhile, many financial advisers recommend that households:

• pay off balances in full where possible, or at least more than minimum payments;
• prioritise high-interest debt first;
• build emergency savings to avoid reliance on credit;
• and avoid layering BNPL or personal loan schemes on top of existing card debt.

What this means for ordinary Australians — an uneasy Christmas ahead

With the holiday season and “silly season” sales entering full swing, many Australians may feel compelled to splurge or carry on borrowing — even as their credit balances swell. Analysts warn that this could deepen debt problems, especially for those already stretching to meet basic living expenses.

If interest rates creep higher, or if unexpected costs hit (e.g. medical bills, rising rents), large numbers of households may find themselves vulnerable — not just to debt stress, but to real financial hardship.

For some, the current high may represent a short-term squeeze; for others, it could mark the start of a long-term tightening of belts — or worse, a spiral of debt that becomes hard to escape.

A warning ahead — authorities urge caution

As Australia heads into a hotter-than-usual summer, with inflation and wages still under pressure, the resurgence in credit card debt serves as a warning signal. Households, lenders, and policymakers alike face a test of financial resilience.

Whether this spike in debt becomes a blip — or a harbinger of deeper economic stress — depends largely on how promptly and prudently Australians respond.