Survey finds credit card debt increased during COVID-19

Debt drama: More people went over their credit card limits during the coronavirus pandemic. Picture: Louie Douvis
Debt drama: More people went over their credit card limits during the coronavirus pandemic. Picture: Louie Douvis

Credit card debt increased during the coronavirus pandemic, with a new survey finding two million credit card holders went over their limits.

A survey by comparison site Finder found soaring unemployment and wage cuts during the pandemic led people to overdraw on their credit cards, with 15 per cent of card holders - or two million people - going over their limit during the pandemic.

While eight per cent of those card holders reported they had managed to get their debt back down under the credit limit, the remaining seven per cent were still over.

The survey also found more women (18 per cent) than men (13 per cent) went over the limit on their credit card during the pandemic.

The Reserve Bank of Australia says the average credit limit per borrower is $9892, and more than 14 million credit cards are in circulation.

Official data shows credit card balances accruing interest dropped during the height of coronavirus (from $1877 in February to $1647 in June), but repayments against the interest-accruing balances dropped from February to May.

Finder's personal finance expert Kate Browne said some Australians were entering a credit card danger zone.

"Even missing one or two payments can become a slippery slope, which can spiral out of control quickly," she said.

"Missing payments not only adds to financial stress but can also impact your credit score. If you are missing payments, your credit score and your financial credibility can be put at risk."

She warned that the true scale of the financial stress experienced by many Australians due to coronavirus was yet to be fully felt.

"If you are struggling to make repayments, contact your bank immediately to discuss the options available to you," she said.

"They may be able to organise a repayment plan to help you get your debt under control."