According to statistics recently released by the Reserve Bank of Australia (RBA) and bank regulator APRA, our national obsession with credit cards may be on the decline.
Figures show that the number of credit card accounts dropped to 15.97 million in November. This is the fewest number of accounts since March 2015.
Also during November, the total value of credit limits dropped to $151.94bn, whilst total balances accruing interest fell to $31.52bn – the lowest since September 2017.
According to Sally Tindall, Research Director at ratecity.com.au, it’s a sign that the tighter lending landscape is having a direct effect on both borrowers and lenders. In particular, the new credit card rules which came into effect on January 1st.
“The government’s new regulations will force new credit card applicants to accept a credit limit they can prove can be repaid within three years. It will also see people rethink the merits of having multiple cards.”
“Meanwhile, people applying for a home loan in 2019 might choose to cancel their credit card or reduce their limit in order to get their home loan application over the line,” she added.
This is a key point to remember if you are planning to apply for a home loan this year. Being smart about all of your financial decisions, including the management of your day-to-day banking, could help you secure the home loan you want.
Paying off and/or cancelling your credit cards will help keep your credit health looking favourable to lenders. And, of course, the less interest you are regularly paying on your everyday credit cards, the more money you will have available to put towards a deposit, or to paying home loan payments.
Weaning ourselves completely off credit cards may take a while yet. But, according to Sally, “2019 could be the year that finally bursts the plastic bubble.”
This article is merely commentary and suggestion. Contact a professional before making any financial or purchasing decision.
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