Credit card debt a bigger problem than home loan debt

Mozo

Thursday 17 June 2010

Credit card debt is more common among Australian households than home loan debt, it has been revealed.

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The Melbourne Institute’s latest research for the June quarter found that 36.6 per cent of households had credit card debt, against 33.9 per cent with mortgage debt.

Edda Claus, a research fellow at the institute, expressed concern at the finding.

"I would think this is not a good thing because interest rates on credit cards would tend to be quite high," she observed.

Such debt worries may encourage more Australians to compare credit cards in search of better rates. Ms Claus also noted that despite the debt figures, household finances are generally in a better shape now than they were during the first three months of the year.

According to the Melbourne Institute’s research, almost 49 per cent of households are now saving their income, against 46 per cent in the first quarter of 2010.

Earlier this week, Reserve Bank deputy governor Ric Battellino argued that structural declines in official interest rates in recent decades have caused households to accumulate more debt.

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