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Rising Credit Card Debt Sends a Warning to Borrowers
Why revolving balances can quietly weaken your next loan application
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The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
Fresh credit card figures suggest many Australians are still leaning on high-interest debt to manage household pressure, even as lenders continue to scrutinise borrowing capacity closely.
Canstar’s review of Reserve Bank credit card data shows personal credit card debt attracting interest reached $19.4 billion in May 2026, up $61 million for the month.
It was only the second monthly rise this year, but the size of the balance is a timely warning for anyone planning to apply for a personal loan, car loan, business loan or home loan.
The concern is not just the balance itself. Canstar estimates Australians are collectively paying about $10 million a day in credit card interest, based on an average purchase rate of 18.61 per cent. That is an expensive form of debt compared with many structured loan products, particularly where borrowers are only making minimum repayments and allowing interest to compound.
Spending behaviour also matters. Total card transactions across credit and debit cards reached $89.5 billion in May, the second-highest level on record. Credit card spending alone rose by $1.1 billion over the month to $29.9 billion. While using a card is not automatically a problem, carrying a balance from month to month can quickly turn everyday spending into a drag on cash flow.
For borrowers, this has a practical implication: credit card limits and unpaid balances can affect how a lender views your ability to service new debt. Even if a card is not fully used, many lenders assess the risk attached to the available limit. Reducing limits, clearing balances, or consolidating costly debt may improve the shape of an application, but only when the replacement loan genuinely lowers costs and supports a realistic repayment plan.
This is where structure becomes important. A debt consolidation loan can simplify multiple repayments, but it should not be treated as a reset button for further spending. Borrowers should compare the interest rate, comparison rate, fees, loan term and total repayable amount before switching. Extending debt over a longer term may lower monthly repayments but can increase the total interest paid.
If card debt is starting to interfere with your savings, mortgage repayments or business cash flow, it may be time to model repayments and compare options before applying for further credit. The key lesson from the latest figures is clear: high-interest revolving debt can quietly reduce financial flexibility, so getting it under control early can strengthen both household budgets and future loan applications.
Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.
The Reserve Bank of Australia’s latest retail payments figures, released on 7 July 2026, add another useful snapshot of how Australians are managing day-to-day spending and short-term debt. In May 2026, total purchases on Australian-issued cards reached $99.7 billion, with credit and charge cards accounting for $40.7 billion and debit cards making up $59.0 billion. Find out now if you qualify and compare rates, offers and options from multiple lenders - without a credit check! - read more
Fresh credit card figures suggest many Australians are still leaning on high-interest debt to manage household pressure, even as lenders continue to scrutinise borrowing capacity closely. Canstar’s review of Reserve Bank credit card data shows personal credit card debt attracting interest reached $19.4 billion in May 2026, up $61 million for the month. - read more
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