The new research released by Tribeca Financial suggested that Australians’ financial literacy is low, particularly when it comes to knowing how to budget, the impact of late payments, and the mounting cost of personal debt.
Tribeca Financial CEO Ryan Watson said he is disillusioned about people getting into debt over discretionary purchases.
“It is alarming for people to get into credit debt over insignificant purchases like takeaway food and Uber Eats. The debt mounts up, leading to Aussies managing debt with high-interest rates,” said Mr Watson.
Other important factors
According to Tribeca Financial’s research, nearly 48 per cent of Australians who are aware of their credit mismanagement have continued to make purchases through “buy now, pay later” services.
In these instances, Mr Watson said he’s disappointed in the behaviour of the platforms and institutions offering these services.
“I am consistently disappointed by lenders who act in their own best interests, often with no consideration of an individual’s ability to manage debt. Our research found almost nine in 10 Australians have been subject to additional charges relating to their credit card,” said Mr Watson.
“But we can’t lay all of the blame on credit providers. It seems Aussies are knowingly getting themselves into debt, and banks and financial providers are benefitting as a result,” continued Mr Watson.
The impact of small spends on your mortgage
Using buy now, pay later services and having a history of spontaneous spending on retail goods can impact your ability to secure credit.
Nest Egg has a comprehensive guide to the kind of spending red flags lenders look for, which you can access here.
Cameron Micallef is a journalist at Nest Egg, writing primarily about personal wealth and economic markets.
Prior to this, Cameron worked for Australian Associated Press. He graduated from the University of Wollongong with a double degree in communications and commerce.