What Is the Secret of the Low Australian Credit Debt?

June 06, 2008

Do you know much about Australia? Canberra is its capital. Kylie Minogue, Cate Blanchett, Hugh Jackman, Steve Irwin are the most world-wide famous people born in Australia. Sydney Opera House and Sydney Harbor Bridge are among the most distinctive and beautiful architecture masterpieces of the XXth century. Aussies (informal for Australians) speak English, Australian-English, to be more exact. But did you know that Australia has a highly developed credit card industry? And that Australian overall credit card debt is lower than the one America has?

American credit card holders used to carry monthly balances and they are quite comfortable with that. While Australian credit consumers do their best to pay off their balances in full. They do not like the idea of staying bad debtors.

Australian credit card owners do not stint themselves in spending when their plastics carry 0% intro rates or if they carry low rate card deals. But after a couple of interest rate hikes they get much more penny-wise. Australians regularly make their monthly credit card payments and try to stay away from hefty credit card charges. Australian customers turn out to be more disciplined card users carrying less credit card debt.

While the US Federal Reserve Bank tries to loosen the tense on the US credit card marking by cutting the fed rate to make borrowing money more available for banks, the Reserve bank of Australia raises the rates in order to cut down consumer spending. And the Australian way of improving the country's financial situation proves to be more effective than the US one. Interests climb up, credit consumers hold back their spending in order to avoid credit card debt.

The statistics shows that the total credit card balance in Australia has increased by 9.5% over the 12 months period. While the average rise makes up 17%. So, how did they do it? What is their secret?

First of all, they have reduced the volume of cash withdrawals. The use of cash advance option on the Australians' credit cards has dropped by 2.3% over the past 8 months. It is a smart decision to avoid cash advance pitfalls, for you will have to pay sky-high interest rate for withdrawing some cash from your plastic.

Americans spend a great deal of money during Christmas shopping season. Last December the credit card purchases amount went up by nearly 12%. However, if we take a look at Australian economic reports over the same rush season, we will see that their credit card repayments rose by 5.5%. Australians do not lose their head and stay reasonable in their credit card spending even on the threshold of Christmas.

The survey also shows that the increase of credit card account numbers in Australia made up just 0.4% last December. This proves that credit card spending in Australia grows at a pretty slow pace. Or maybe Australians are just not prone to change their preferences in choosing credit cards.

So, now you know a little bit more about Australia, its credit card market and card holders spending habits. Now you see that Australians, living on a separate continent, really differ from Americans. But this is what concerns credit matters. Maybe, if you take a closer look at Australia's culture, customs, traditions and mentality, you will find a lot of things we have in common.