More credit cards in use than ever before

Reaching a new milestone, active credit cards in use hit 82 per cent recently across the country, according to a study from Money.com.au. There are currently 9.4 million active credit cards, up from 8.9 million three years ago.

Commenting on the trends, Money.com.au’s research and data expert, Peter Drennan, said that the increase showed signs of a recovering economy.

“After the pandemic, people began consolidating and closing unused credit cards to improve their outcomes on new home loan applications when interest rates were high. But, over the last year, the number of credit card users has been rising, likely driven by increased consumer confidence and spending as the economy recovers from hyperinflation and consumers adapt to the high interest rate environment,” Drennan said.

“From another perspective, the increase in active credit cards and spending is likely good news for banks and financial institutions, which could see increased transaction fees and interest revenue from higher card usage.”

Meanwhile, inactive personal credit card accounts dropped by 41 per cent over the last three years, with almost 1.5 million dormant accounts closed. This means the total number of credit card accounts across Australia has fallen by 7.6 per cent since 2021, but the number of active accounts has risen by 6 per cent.

Average spending with credit cards has increased by 22 per cent over the last three years, reaching a total of $34,500. In the same period, total annual credit card spending increased by 29 per cent.

Despite this, balances accruing interest per active account have fallen by 3.5 per cent, which Drennan said highlights smarter spending.

“Consumer confidence is growing, and it’s another sign of economic recovery. Australians are showing they can use credit cards responsibly, and pay them off monthly while leveraging them for convenience and rewards rather than as a fallback for emergency debt,” Drennan said.

“Australians are adapting to rising living costs and higher interest rates, and this rebound in discretionary spending on categories like recreation and culture suggests a return to normal, with people prioritising experiences and enjoyment despite economic pressures.”

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

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