The $87 billion time bomb: how to defuse credit card debt before your interest bill implodes
06 Jan 2026
Australians are estimated to put $87 billion on their credit cards over the silly season months of November, December and January, sparking warnings of a national debt hangover as people race to repay credit card balances before interest charges kicks in.
Our analysis of RBA credit card data has found shoppers could end up putting a further $28.9 billion on the plastic in the month of January, following bumper spending at the end of 2025, should shopping behaviours mirror that of the previous five years.
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| Estimated value of personal credit card purchases | |
|---|---|
| November 25 | $28.9 billion |
| December 25 | $29.1 billion |
| January 26 | $28.9 billion |
| Total | $86.8 billion |
Source: Canstar. Amounts are estimates based on applying the compound annual growth rate to the value of seasonally adjusted personal credit card purchases from 2024/25.
Credit card debt also likely to rise on the back of silly season spendathon
Credit card debt attracting interest charges is already sitting at $18.3 billion, according to the latest RBA data for October, a figure that, if history is anything to go buy, will rise across the silly season. Credit card debt has risen every January since 2015, as Australians notoriously struggle to clear their debt within the interest-free period.
Our analysis of RBA data shows Australians are collectively handing over an estimated $9.4 million a day to the banks in credit card interest charges, making it even harder to get on top of credit card debt in the new year.
This could climb even higher in January if shoppers can’t pay back their silly season spending within the limited interest-free days permitted by card providers.
Interest-free days: a lesson in fine print
Most credit cards give customers time to pay back their purchases before charging interest, known as interest-free days.
The maximum amount of time given varies from card to card, typically between 44 and 55 days, but also depends on how long their billing cycle is and where a customer is in this cycle.
For example, if a card offers ‘up to 44 interest-free days’, and a purchase is made on the first day of a 31-day billing cycle, the customer would have 44 days to pay that purchase back. However, if it was on the last day, they would only have 13.
This means shopping put on the plastic on Christmas Eve, could, in some cases, need to be paid back this week.
Anyone with money owing on their card will find their interest-free days are void until they clear their credit card in full.
How to clear credit card debt
- Tally it up – work out how much you owe in total, on what cards and BNPL platforms.
- Diarise D-day – that’s the day your bills are due, and your interest charges start.
- Stop spending – don’t dig the hole any deeper. Take your credit card off your phone and put the physical card in an envelope that says “do not touch until debt is cleared”.
- Rally quick funds – sell big ticket items around the house, redirect the bonus, downgrade your January holiday to a shorter trip, use up any forgotten gift cards or rewards points.
- If you’re not going to make it, ask for mercy – if you fall short by a handful of days, call your bank and ask for any interest charges to be waived.
- If it’s going to take longer – consider switching to a low rate card or a personal loan (although they have their fair share of traps). Whatever the option, set up a plan to pay money towards the debt every single week. Work out how long it will take to pay it back in full and put that goal on the fridge.
- If you get into real trouble, ask for hardship – credit card providers have hardship programs to help you clear your debts. Also call the National Debt Helpline (1800 007 007) for free financial help.
Make 2026 the year to get back on track
Canstar’s Data Insights Director, Sally Tindall says, “The post-Christmas ‘debt hangover’ is a decade-long certainty: personal credit card debt has climbed every January since 2015, as shoppers fail to beat the clock on their interest-free days.”
“If your credit card is nearing its limit, act before the situation spirals. Look for immediate ways to course-correct: use accumulated reward points for groceries, swap an expensive trip for a staycation, or declutter and sell unused items for extra cash.
“For those facing stubborn debt, make 2026 the year to get back on track. Start by calling your bank and asking to be put on a lower interest rate or move to a card offering a better deal. If you have a rubber arm, you could be better off switching the debt over to a personal loan where you have to pay interest, but you’re forced to pay off the debt within a set timeframe without the ability to add to it.
“To find the funds, renegotiate bills such as your phone, internet and electricity, and put the monthly savings towards paying off your debt.
“However, if your debt is approaching skyscraper levels, you may need a larger circuit breaker. This might mean making the tough call to skip a holiday or sell a vehicle. While these sacrifices sting, the mental and financial freedom of being debt-free is worth the discomfort.”
This article was reviewed by our Consumer Editor Meagan Lawrence before it was updated, as part of our fact-checking process.
