Ratio of credit card debt to discretionary income in Australia - Data and Analysis (1986-2034)

IBISWorld forecasts the ratio of credit card debt to discretionary income to rise by 0.06 percentage points in 2026-27, to 5.18%. Growth in real household discretionary income is projected to slow over the year, as inflation from global oil supply shortages continues to work its way through the economy. This is both increasing the level of spending placed on credit cards and reducing the ability of households to pay current credit card debt off. On the other hand, the number of credit card accounts is projected to continue to fall in the current year, constraining the rise in credit card debt levels, and therefore, the ratio of credit card debt to discretionary income.Credit card balances have fluctuated in recent years, but are expected to rise over the five years through 2026-27. Consumers have navigated a complex landscape of rising interest rates and cost-of-living challenges. Average standard credit card interest rates have risen from 19.94% to 20.99% over the period, while average low-rate interest rates have climbed from 12.62% to 13.49%, boosting the average debt level per credit card account and lifting the ratio of credit card debt to discretionary income. Nevertheless, consumers, spurred on by rising interest rates and tighter budgets, have been reducing their credit card usage. Strong competition from alternative payment methods, like buy now pay later services, has curbed growth in credit card debt.Data from the RBA shows that the number of credit and charge card accounts in Australia has declined more than 7.0% since 2021-22. Instead, households have opted to use savings to fund expenditure. The emphasis on credit card rewards programs has lessened as consumers have instead prioritised affordability and debt management amid rising inflation and interest rates. However, cost-of-living pressures over the two years through 2023-24 saw the ratio of credit card debt to discretionary income reverse its downward trend. Overall, IBISWorld forecasts the ratio of credit card debt to discretionary income to rise at an average annual rate of 0.06 percentage points over the five years through 2026-27.