High income earners rack up debt
According to Australian Securities and Investments Commission (ASIC) over half a million Australians have more than $5,000 in credit card debt .
It is often middle income earners, managers and degree qualified people who are most likely to carry $5,000 or more compared to the general population. And, while 42% of Australians have a degree or diploma they represent 49% of those carrying $5,000 or more in credit card debt.
Miles Larbey, Senior Executive Leader of ASIC’s MoneySmart said, ‘This group of Australians are well educated and have above-average incomes, but they aren’t necessarily making the smartest decisions when it comes to managing their finances. People might be excellent managers in the workplace, but they aren’t necessarily managing their finances in the best way possible.
‘While credit cards can be helpful if used wisely, making only the minimum repayment on a $5,000 credit card debt will take you 30 years to pay off . That’s the length of your average home loan.’ said Mr Larbey.
Around 2 million Australians do not pay off their personal credit card debt in full each month with Australians owing more than $34 billion in credit card debt.
MoneySmart’s four simple steps:
- Increase your repayments and make a plan to pay it off.
- Use the MoneySmart credit card calculator to see how much time and money you will save.
- Reduce your interest rate. Shop around for the best deal on your credit card or consider a balance transfer deal.
- Work out how you will use the money you save to invest in building your wealth in 2014.
1. 12 months to November 2013 Roy Morgan Research. Back to  in text
2. Calculated using the MoneySmart credit card calculator, with an interest rate of 18.0% (the median of interest rates published on Canstar's website) and the minimum repayment. Back to  in text