Soaring credit card debt levels spurred by recent interest rate rises are creating financial difficulties for many Australian families.
Leading economist Craig James, of CommSec, said the situation could worsen before it improved.
"If there is a further interest rate rise next month, most people would still get by. But many marginal borrowers using credit cards would be getting much closer to their limits and would need to start making some hard decisions quickly about their budget and personal spending habits," he said
Mr James said that while people were prepared for the first interest rate rise in May last year, the second and third increases by the Reserve Bank had taken most people by surprise.
He said this had tightened many people's cash flow and made them hold more debt on their credit cards for longer.
The average credit card balance is just under $3000, with a total outstanding debt of $28.54 billion on all credit cards in Australia.
In February, cardholders had a record 38.2 per cent of available credit -- the highest amount since records began in 1985.
Australians have taken to the credit card with a relish few other countries can match. .
In 1997, there were 7.5 million credit card accounts in Australia. Today there are 13.4 million. Source: Sunday Herald
