Australian Credit Card Debt Hits Record High

Credit card debt in Australia topped U.S. $35.5 billion at the end of July, though the interest-rate burden on households held steady in the Reserve Bank of Australia’s latest figures, according to Melbourne-based The Age newspaper today.  

Australians owed 161.3 per cent of their annual disposable income in June, the first time that ratio has crossed 160 per cent, according to the Reserve Bank of Australia’s Bulletin. The ratio of debt to wealth — household assets — remained steady at 26.3 per cent. It was the first time debt had not climbed as a proportion of assets since June 2006. 

During the second quarter this year, credit card debt rose 2.8 per cent and Australians paid 11.9 per cent of their disposable income on interest payments, unchanged from the previous quarter. 

ABN Amro chief economist Keiran Davies said it would be "another few months" before figures became available showing what impact the failure in the U.S. of billions of dollars in subprime mortgage loans would have in Australia. 

The Age reports that debt has quadrupled as a function of disposable income since 1980, but that shift has been eased by growth in the value of assets, which have doubled as a function of disposable income over the same period.