Aussies use credit cards extensively for lifestyle spending, survey shows

Australians are using their credit cards extensively for lifestyle spending, according to new research from Money.com.au.

The nationwide survey shows that an average person spends $1,200 per month or $14,400 annually, on non-essential items such as dining out, entertainment, shopping, and travel.

Over 40 per cent of monthly credit card transactions goes to non-essentials instead of bills or everyday needs, based on an average transaction value of $2,961 per active credit card account.

Sean Callery, Finance Expert at Money.com.au, noted that many Australians underestimate the extent to which their credit card usage is driven by lifestyle-related purchases.

“If you think about it, that means roughly two in every five dollars charged to credit cards each month is going toward lifestyle spending rather than essential or emergency expenses. It’s striking given the ongoing cost-of-living pressures,” said Callery.

“The challenge is that discretionary spending changes from month to month, so it’s harder to keep track of than essentials like rent or bills. Before you know it, you’re paying over 20 percent interest, depending on the card, on last month’s little luxuries, and that’s how people can easily fall into a lifestyle debt trap.”

The findings indicate that 70 per cent of credit cardholders pay their full balance monthly to avoid interest, while 30 per cent carry an outstanding balance into the following month, incurring interest, or pay only the minimum amount each month.

Survey results reveal that Gen X spends the most on lifestyle items using their credit cards, averaging $1,400 a month in discretionary purchases. Millennials follow with $1,200, and Baby Boomers at $1,160. Gen Z spends the least at $735 per month, which may be linked to lower income and credit limits.

Despite this, younger Australians are more inclined to retain a balance or make only the minimum monthly repayment. About 37 per cent of Millennials, 36 per cent of Gen X, and 35 per cent of Gen Z report doing so, in contrast to 20 per cent of Baby Boomers.