MORE FAMILIES LIVING ON CREDIT, SURVEY FINDS
Written on the 21 March 2012
A GROWING number of Australian families are turning to credit cards to cover increasing costs of living.
With rising unemployment and soaring petrol and utility prices, 41 per cent of households with children now rely on credit cards to cover daily living expenses – up 2 per cent since late last year according to the survey by finance consultancy firm Dun & Bradstreet.
The survey found the majority of Australians still prefer using cash savings to make major purchases, but still flash their plastic increasingly to cover everyday expenses including groceries.
An estimated 15 million credit cards are in circulation across the country with a further 36 million debit cards used on a regular basis.
The average Australian credit card balance is around $3300, with credit and charge card users collectively owing nearly $50 billion from outstanding transactions according to the Reserve Bank of Australia.
Although interest rates have remained stable in recent months, a third of families say they struggle to manage existing debt levels, with 25 per cent admitting they would forego a mortgage repayment if they ran short of cash.
Not surprisingly, lower income households are feeling the most pain.
Nearly half (46 per cent) of all low-income households expect difficulty in managing existing debt, an increase of eight percentage points since the end of last year and 11 points above the national average.
A third of all lower income households expect the situation to worsen in coming months.
Electricity bills and pay-TV accounts were nominated as the first bills most likely to go unpaid by families under economic hardship.
Despite the increasing financial strain, more than a quarter of all families say they are considering taking on another credit card or seeking an increase in existing credit limits to help cover rising household costs.