Australians are being warned to avoid "debt regret" as applications for credit cards surge ahead of Christmas.
Credit reporting agency Veda says there has been a 10 per cent increase in credit card applications in the December quarter each year for the past five years.
There has also been a similar rise in the number of defaults.
One bank is so bogged down, it is taking twice the usual time to process applications.
Veda chief executive Belinda Diprose says consumers must be careful not to over-commit.
"We've done some research that looks into the last five years of credit trends, and we find that credit card applications peak in November," she said.
"They're often 10 per cent higher in those last three months of the year and we see people particularly taking out credit cards and this often leads them to, perhaps, over-committing themselves." Ms Diprose says those customers are 8.5 per cent more likely to default in the new year.
She says it indicates that those people are putting themselves into debt stress.
But she says that does not indicate financial institutions are not completing due diligence requirements before selling credit cards.
"No, certainly not.
It's not until later down the track that people find that they're [starting] to struggle," Ms Diprose said.
"Things start piling up and people get caught up in the Christmas rush in terms of buying presents for their family.
"You've got post-Christmas sales and it's easy to get caught up in that Christmas rush." There has been a 6 per cent drop in credit card application inquiries between January and October this year.
Ms Diprose says Veda has found the public's appetite for credit cards has dried slightly.
"I know myself I'm reaching for my debit card more often than I am my credit card, and that could be an indication of a wider trend," she said.