Australian economy faced the major shock of substantial financial liability in the form of holiday debt, amidst the end of festivity week and 2018 year-end. The statistic suggests that each Australian citizen was facing an average holiday debt of $1,863. It is for the first time in the history of Australia, where there was an increase in the credit card debt of almost $30 billion.
The debt of $30 billion in the form of holiday debt means that the Aussies have spent an enormous sum of money during the Christmas week. It will not only influence the household budget of the individual but will also create economic instability. This is anticipated to push up the interest rate. Those citizens who are under high debt might land themselves into huge financial trouble. They will face challenges during the payment of the loan. If they are not able to make payments of the loan on time or rather a default, there might be a possibility of higher interest and a low credit rating by the banks. Their stand of living might also get influenced as it might lead even to the recession.
The statistics point out that the Australian citizens incurred massive expenditure in December 2018 than any other month of the year. They relied more on the credit card for making payments whose burden is finally carried in the new year 2019.
The mounting debt is likely to influence the interest rate of the banks, as they will also try to recover the amount through different sources, which in turn will also impact the economy of Australia. Also, the citizen’s standard of living might go down. It might be possible that they will curtail their expenditure to fulfill their minimum requirements and there might also be a fear of securing the loan in the future.
Even though there is enormous holiday debt which is carried over to 2019, the Australian citizens also have multiple options where they can manage their obligations. They can opt for a balance transfer where there can move the outstanding debt to another card and with a lower rate and fewer penalties or reward points.
Sources suggest that the banks are now issuing a zero percent balance transfer card which has a zero percent introductory rate on transfers. These cards have an interest free period which is variable. Most of the debt that gets transferred in these balance transfer card will give the cardholder the entire year to clear the outstanding amount. The bank generally prefers that the cardholder need to make payment within a single year.
However, there is some respite in the statistics of Australian personal debt in the form of a credit card. Although the number of credit cards issues has increased in the economy, statistics suggest a drop in average balance accruing interest per card from $2470 in 2012 to $1984 by 2018 end.
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