Household debt in Australia is among the highest in the world, with $32 billion owing on our credit cards alone according to the latest Australian Securities and Investments Commission (ASIC) data. This means the average Australian credit card holder is $4,200 in debt and paying around $700 in interest each year given the standard interest rate of 15 to 20 percent. Even when the 55-day interest free period offered by some banks is factored in, the estimated interest on Christmas credit card debt alone will still total $230 million. While 81 percent of borrowers plan to pay off their holiday debt within three months, historic data suggests that almost 20 percent will take longer than three months and 5 percent will take a year or longer.

Heavy spending in the lead-up to Christmas coincides with increased consumer confidence over the period, with the latest ANZ Consumer Confidence Index showing a moderate rise of 4.7 percent - a high not seen since November 2013. While the official retail figures for December 2017 are yet to be released, the Australian Retailers Association (ARA) and Roy Morgan Research estimates total pre-Christmas sales as high as $50 billion. According to Russell Zimmerman, Executive Director of the ARA, "Although there have been various disruptions to the Australian retail market throughout the year, we look forward to seeing our pre-Christmas and post-Christmas predictions come to fruition when the retail trade figures are released in the new year,"

Credit card trends have changed dramatically over the past 20 years, with 7 million credit card accounts in 1995 contributing to a total balance of almost $6 billion dollars compared with 17 million accounts and $51 billion dollars in 2016. While there are two and a half times more credit card users today, the total credit card balance is almost 10 times bigger. According to Graham Cooke, Insights Manager at Finder, "Aussies spend more on credit cards in December than in any month... This over-reliance on credit cards in December means the cost of Christmas is carried well into the new year and could take a toll on household budgets throughout 2018."

Efforts are being made to reduce credit card debt in Australia, with the Australian Bankers Association (ABA) outlining a strengthened code of conduct with a big focus on credit cards in the week before Christmas. Along with proposed changes to unsolicited credit card increase offers, the ABA are also suggesting easier card cancellation schemes, better customer notification measures, interest charges on remaining balances instead of full accounts if a loan is being paid down, and improved assessment measures to check a customer's ability to repay the entire amount of a loan within a certain timeframe.

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