Borrow
Aussies face debt crisis following COVID-19
The sharpest economic downturn since the Great Depression is seeing the number of Australians struggling to pay down their debt rise, new research has found.
Aussies face debt crisis following COVID-19
The sharpest economic downturn since the Great Depression is seeing the number of Australians struggling to pay down their debt rise, new research has found.
According to research by JD Power, more than 77 per cent of Australians say they are now struggling with debt, with a further 62 per cent saying they cannot manage their debt obligations.
The findings show that Australians, who are now turning to government support, could be in a worse financial situation than before the crisis began as mounting financial debt comes at a time when the government is looking to remove itself from supporting Australians.
“As the Australian federal government this week began talking about the possible timing to wind back JobKeeper support, the short- and long-term effects of the pandemic on individual finances is becoming a significant concern for many Australians,” JD Power said.
Credit card are being relied on for necessities
The report found that more Australians are turning to credit cards to pay for basic living expenses as COVID-19 pandemic hits their individual finances.
“While 42 per cent of cardholders say they are spending less on their credit card, 26 per cent indicate using their card for more household necessities. More than one-quarter (26 per cent) are making more online purchases and 22 per cent are using their card more often to pay household bills,” JD Power said.
Financial adviser Helen Baker explained the long-term impact of credit card expenses on Aussies’ finances.
“A significant proportion of Aussies are throwing wasted money on interest each year. The data revealed nearly a third (31 per cent) of credit card holders pay more than $360 a year in interest, on average, across all their cards. Eighteen per cent pay an average of at least $600 each year on interest, while a concerning eight per cent pay $1,200 or more each year,” she said.
The financial expert has revealed four tips to pay down credit card debt faster:
Pay down your debt, don’t create more. The best thing credit card holders can do with their debt is to pay it off immediately, as interest is accrued at about 20 per cent.
Consider taking out a personal loan or roll your loan into your mortgage. A third (32 per cent) of survey respondents said they would have considered transferring debt onto a personal loan with a lower-interest credit card, when their credit card debt was at its highest. This is a good option for those who have large expenses to pay, as interest rates on credit cards are the highest among all financial products, and when not paid off in full each month, will continue to accumulate more debt.
Transfer debt onto a zero-interest balance transfer card. There are many interest-free balance transfer cards in the market that allow you to transfer your credit card debt and defer interest payments for six months.
Make a budget and keep to it. Start by creating three budgets – absolute basics, moderate and living the dream – and separating their expenses into these categories. Specific amounts (rather than percentages) should then be allocated on each expense, such as groceries, bills, petrol, and tracked over a one-month period.
About the author
About the author
Credit card
Are you paying too much on your credit card?
Despite the COVID-19 pandemic leading to an increase in card usage and a greater propensity to save, Aussies are still unaware of their credit card’s interest rate, new research has revealed. ...Read more
Credit card
Controversial cashless welfare program continues for another 2 years
The Morrison government has announced an extension on the controversial cashless debit card scheme for a further two years. ...Read more
Credit card
Credit card debt falls to lowest levels since 2004
Early access to superannuation, a lack of places to spend money and low consumer confidence has seen Australians pay off $6.3 billion in credit since the pandemic began, new research has revealed. ...Read more
Credit card
Is it time to check your credit score?
Australian consumers who are looking to get a loan are being urged to recheck their credit score, with financial hardships and changing income statements likely to have an impact on their overall abil...Read more
Credit card
CBA launches new no-interest credit card
As younger Australians continue to choose buy now, pay later services over debt-accruing products, Australia’s largest bank has launched a no-interest credit card. ...Read more
Credit card
Interest-free credit cards hit Australia
One of the big four banks will now offer the first-ever no-interest credit card targeted at younger Australians who are ditching credit for buy now, pay later services. ...Read more
Credit card
Personal and business credit cards: What’s the difference?
With more Australians taking on contract and gig work in the COVID-19 downturn, more people are likely to be tossing up whether or not to use a personal or a business credit card, so what’s the diff...Read more
Credit card
9 tips to stop the credit card debt cripple
With debt levels expected to rise in the coming months due to COVID-19-related financial pressures, one expert has offered up some handy tips to stop Australians from being inundated by crippling cred...Read more
Credit card
Are you paying too much on your credit card?
Despite the COVID-19 pandemic leading to an increase in card usage and a greater propensity to save, Aussies are still unaware of their credit card’s interest rate, new research has revealed. ...Read more
Credit card
Controversial cashless welfare program continues for another 2 years
The Morrison government has announced an extension on the controversial cashless debit card scheme for a further two years. ...Read more
Credit card
Credit card debt falls to lowest levels since 2004
Early access to superannuation, a lack of places to spend money and low consumer confidence has seen Australians pay off $6.3 billion in credit since the pandemic began, new research has revealed. ...Read more
Credit card
Is it time to check your credit score?
Australian consumers who are looking to get a loan are being urged to recheck their credit score, with financial hardships and changing income statements likely to have an impact on their overall abil...Read more
Credit card
CBA launches new no-interest credit card
As younger Australians continue to choose buy now, pay later services over debt-accruing products, Australia’s largest bank has launched a no-interest credit card. ...Read more
Credit card
Interest-free credit cards hit Australia
One of the big four banks will now offer the first-ever no-interest credit card targeted at younger Australians who are ditching credit for buy now, pay later services. ...Read more
Credit card
Personal and business credit cards: What’s the difference?
With more Australians taking on contract and gig work in the COVID-19 downturn, more people are likely to be tossing up whether or not to use a personal or a business credit card, so what’s the diff...Read more
Credit card
9 tips to stop the credit card debt cripple
With debt levels expected to rise in the coming months due to COVID-19-related financial pressures, one expert has offered up some handy tips to stop Australians from being inundated by crippling cred...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
