The leading form of waste is credit cards, at $6.16 billion, based on us paying an average of 17.15 per cent interest on nearly $36 billion worth of plastic purchases.
Kirsty Lamont, director of finance product comparison website Mozo which produced the research, said credit cards were obscenely expensive form of debt that hurts the poorest households most.
“I was quite shocked that credit cards came out on top a the number-one money waster,” Ms Lamont said.
Bank exception fees consume a further $490 million, while $360 million is lost on unused gift cards.
CommSec analysis of new Reserve Bank of Australia data finds the average credit card balance declined by $39 or 1.2 per cent in April to $3218.
“The average credit card balance is down by 3.2 per cent on a year ago, the biggest fall in 19 years of records,” CommSec chief economist Craig James said.
Increasingly, consumers were using their own money to make purchases, rather than going in to debt, Mr James said.
Of credit cards attracting interest charges, the average outstanding balance rose by $61 in April to $2355 after falling by $60 in March. The average balance accruing interest is down by 4.7 per cent on 12 months earlier.
It would be falling faster were it not for the fact that credit card interest rates haven’t been falling – unlike other types of borrowing.
The worst cards charge 25 per cent interest. The best are less than 10 per cent.
Smokes are second on the Mozo money-waste list. Australians are spending more than $5.5 billion on tobacco products annually.
The next largest culprits are household food waste at $5.20 billion then gambling at $2.57 billion.
Fifth is mobile phone excess charges – $1.5 billion. There are some encouraging signs on this front. Optus recently reported an annualised $97 million decline in revenue raised from data over-runs.
And an Optus spokeswoman said that “we will launch new plans in the coming months which will further address the issue of bill shock.”
Household energy waste ($1.43 billion) and traffic fines ($1.3 billion) are next on the list.
ATM charges remain stubbornly high at $600 million.
In 2009 there was a fall after RBA reforms made fees more transparent. But, Ms Lamont said, there hadn’t been any decline in the past two years.
“All this spending is avoidable,” said Mozo director Kirsty Lamont. “Even if you enjoy the odd flutter on the horses, and feel you can afford it, there’s no excuse for paying banks to let you access your own money through ATM fees.”
Source: news.com.au