Aussies determined to slash credit card debts

Concerned Australians are once again signalling their intentions to ditch their credit cards and reduce their debt as the global downturn slowly takes its grip on the domestic economy.

A poll commissioned by ING Direct has revealed that consumers have made good progress in reducing their debts and their reliance on credit cards throughout 2011.

At least half of Australians are now paying their credit card debts in full every month. The average number of credit cards per household has fallen to 1.7 from 2.0 a year ago, while 17% report no longer owning a credit card, up from 11% last January.

The amount of outstanding credit card debt has also fallen. The report showed that the median debt per household has fallen to $1,686, a fall of 5% from last year.

Importantly, consumers appear to feel in control of their finances. Only 22% of households expect their financial wellbeing to deteriorate despite many more foreseeing problems for the economy as a whole. A healthy three quarters predict that their financial situation will remain the same or improve.

ING’s David Breen expects the evolving attitude of prudence to continue.

"We don’t think it’s a flash in the pan, we think it’s a long term trend and it’s a positive trend”, he said.

If you are able to pay off your balance each month, make sure that you make the most of your spending through a reward credit card. Alternatively, if you are seeking to reduce your credit card debt, a balance transfer credit card will allow you to consolidate your existing debts and pay them off more affordably. If credit cards have become an enemy over recent years, there’s often a way to make the advantage yours.

Joe Letts