Australians collectively wiped away close to $10 billion in credit card debt since the start of the coronavirus pandemic.
Personal credit card data from the Reserve Bank of Australia shows $9.3 billion of interest bearing debt was paid off between March 2020 and September this year, with higher levels of economic uncertainty fueling a propensity to save and pay off existing liabilities.
The fall means total outstanding interest accruing credit card debt sits at $17.68 billion, the lowest level since 2003.
Since the beginning of the pandemic, 1.2 million credit cards have been closed, with the number in circulation at its lowest point since December 2006.
The total number of transactions via the payment method dropped 8.2 per cent since March last year, equating to a fall of $1.77 billion.
RateCity research director Sally Tindall said households during lockdowns have attempted to improve their financial position, but flagged the inbound Christmas period could see debt levels rise.
"Lockdown living helped many families kick stubborn credit card debt as they channeled money saved from not going out towards improving their financial position," she said.
"The test will be whether Australians can enjoy a lockdown-free Christmas without falling back into bad credit card habits."
Ms Tindall noted customers are turning away from credit cards for everyday purchases, opting for interest-free methods such as buy now, pay later.
"A lot of people are operating under the assumption that buy now, pay later is a comparatively safe form of debt because it doesn't attract interest," she said.
"These platforms might be interest free, however, they often come with hefty late fees and can lead to overspending if people aren't careful."
Credit card holders over September were able to pay off $645 million of debt over the month, according to the RBA.
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