wage stagnation monetary policy
(Image: Getty)

As the silly season sets in and real news stories dry up, desperate journalists turn to a set of Xmas-New Year staples that can be trotted out every year.

An old favourite that seems to have disappeared in recent years was the Christmas toy warning, with Fair Trading bureaucrats putting on display a range of horrific toys that could maim or kill your child once they removed them from the stocking on Christmas morning.

But others are still with us: warnings from nanny state public health groups not to drink too much over Christmas, or not to eat too much over Christmas. How we should avoid misbehaving at office Christmas parties, and not speed over the holidays.

And there’s another old Yuletide favourite: don’t spend too much on your credit card over Christmas (usually styled as “avoid a Christmas debt hangover”). In fact the Christmas credit card story is a great one because you can run it both before Christmas and in the New Year.

Well that story might have to go the way of the killer toys story if anyone bothers to check the evidence, which is to be found in the Retail Payments data from the Reserve Bank. It shows that Australians’ long relationship with their credit/charge cards is coming apart.

Apart from big falls in cheque payments and a drop in ATM transactions, the data reveals a sharp fall in credit card debt attracting interest. The RBA started issuing data in July for the month of May when the national unpaid credit card balance attracting interest totalled $24.8 billion.

By October — just six months — that had fallen 14.9% to $21.108 billion, the lowest total for this figure since January 2005.

The long-term fall is also significant: the figure in October 2017 was a total of $32.068 billion, meaning a fall of more than one-third in three years.

So much for reckless Australians racking up a “debt hangover”.

The fall is bad news for the banks and credit card giants — what was a reliable source of income from fees and interest charges has fallen sharply.

Assuming credit/charge card interest rates average around 19% a year on outstanding balances, that means that the income on unpaid balances from interest costs has fallen from around $6.1 billion in October 2017 to around $4 billion for October this year.

Australians haven’t just cut their credit card debt significantly, they’ve put more than $100 billion into deposit accounts at the country’s banks since the pandemic started — which is good news for the banks, because they have to borrow less in volatile wholesale markets here and offshore, and lightened the load on the RBA with its Term Funding Facility — around $83 billion has been lent to banks by November, a relatively steady figure despite increased bank lending for housing finance.

As Crikey pointed out earlier in the year, they also hoarded cash at remarkable rates.

One of the key narratives pushed by some economic commentators and analysts — especially those based overseas — is that Australia has worryingly high levels of household debt, fuelled mainly by our love of property, and we’re permanently just one recession away from a mass default event that would plunge the financial system into chaos.

Well, we had the biggest recession since the 1930s and Australians coolly paid down their credit card debt and put money into the bank.

That’s partly due to the government’s willingness to keep people in jobs with its JobKeeper payments. But it also suggests Australians are far more responsible with their finances than the nanny state brigade would have us believe.

Journalists might have to find another Christmas cliché to use.