Credit card debt drops under $18b as buy now, pay later rules kick in

Australia’s total credit card debt accruing interest has dropped below $18 billion in April, Canstar analysis of RBA data shows. The drop in April is just the second decline in the past seven months, after previously dipping slightly in February.

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Source: RBA credit card statistics, April 2025, original data terms, excludes commercial cards.

One in six credit cards considered inactive

The total number of credit card accounts fell by 5,276 (-0.05%) to 11.4 million in April – the third consecutive monthly drop. The RBA figures also show 18% of personal credit card accounts were not active in April, meaning the account hadn’t had a single transaction recorded that month. While these accounts weren’t raking up additional purchases, the concern is cardholders might be shelling out for monthly or annual fees unnecessarily. Canstar data shows the average annual credit card fee is $177 for those that charge a fee, yet there are 19 cards that don’t charge ongoing fees (see table at end for lowest fee options). 

Spending slows despite the Easter holidays

The total value of personal credit card transactions fell in April by $371 million (-1.3%) compared to the record high recorded in the previous month. While spending on debit cards rose slightly, overall with credit and debit card transactions combined, this figure also dropped from the record highs recorded the month before.

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Source: RBA credit card statistics, personal cards, April 2025, released 10 June 2025, seasonally adjusted data.

Big bank no interest cards bite the dust

Previously, three of the big four banks – CBA, Westpac and NAB – offered no interest credit cards, similar to buy now, pay later platforms. However, in April, Westpac and NAB removed these cards from sale.

• NAB’s Straight Up card was discontinued on 18 April 2025.
• Westpac Flex card was discontinued on 23 April 2025. 

CBA and Community First are the only two banks still offering these ‘zero interest’ cards.

New buy now, pay later regulations will make it harder to access credit

From today, the buy now, pay later sector is formally regulated, requiring providers to hold an Australian Credit Licence and comply with a modified set of lending obligations.

The new rules for the previously self-regulated, billion-dollar sector will require providers to:

• Check a new customer’s income and expenses and ask them about other debts they might have, including BNPL debts. Existing customers will not be re-checked unless applying for a credit increase
• Check an applicant’s credit file to see if they’ve had any defaults and what other credit enquiries have been made on their file
• Be a member of the Australian Financial Complaints Authority to help settle disputes a person might have with a financial provider – a process that comes at no cost to the customer
• Cap fees so that a provider can only charge a total of $320 in the first year (default and other fees combined) and $245 in subsequent years

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Source: ASIC

Canstar data insights director, Sally Tindall says, “The drop in credit card debt accruing interest in April is a promising sign, but it’s too early to call this a trend. We’re still talking about nearly $18 billion of credit card debt racking up interest every single month.”

“RBA data shows one in six credit cards are sitting dormant, yet many of these are still being charged annual or monthly fees. If you’re not using your credit card, shut it down and save yourself the money. 

“However, if you like the safety net of having a card in case of emergencies, consider switching to one that charges you no ongoing fees but still gives you interest-free days and a manageable interest rate.

“Even if you regularly use your credit card, let this be a reminder to check your annual fee and switch to a cheaper option if you’re not getting bang for buck. With annual credit card fees climbing as high as $1,200, Australians could be collectively wasting millions every year on cards they don’t even use.

“Today marks a turning point for the buy now, pay later sector. For the first time, these platforms are being treated like the credit products they are, and while for some consumers it might not feel like a win, these extra protections are important. It’s about time proper guardrails were around this billion-dollar industry. 

“The new rules will help prevent people from signing up to buy now, pay later services they simply can’t afford to repay. Responsible lending should be the rule, not the exception.

“Caps on late fees and admin fees will help limit the amount people shell out for debts they might have originally thought were a free line of credit.

“Making sure all BNPL users have access to the Australian Financial Complaints Authority is also a big win. It means that if you can’t settle a dispute with your provider, you can ask it to provide independent dispute resolution at no cost to you.”

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Source: Canstar. Notes: based on the credit cards in Canstar’s database. Cards with no interest free days excluded.