A growing number of Australians are turning to credit cards to navigate the challenges posed by escalating living costs, new research shows.
At least 15% of Australians, equivalent to 3 million people, have resorted to obtaining a credit card in the past 12 months, according to data released by comparison website Finder on Monday
Shockingly, 6% of respondents are now depending on credit cards to manage their day-to-day expenses, translating to 1.2 million Australians who have sought financial relief through credit amidst the ongoing cost of living crisis.
Additionally, 7% of those surveyed expressed the intent to acquire a credit card, while 5% are considering credit cards as a means to settle debts accumulated on previous cards. The findings underscore a concerning reliance on credit instruments as Australians grapple with economic challenges.
Amy Bradney-George, a credit card expert at Finder, noted that the escalating costs are pushing more Australians towards credit cards as a financial coping mechanism.
“Credit cards have become a financial crutch for a lot of people who would have previously only used one for emergencies,” she said.“Mounting pressure on households is seeing Aussies borrowing money to keep afloat.”
The allure of benefits such as airline points (6%) and coverage for travel fees or insurance (3%) were cited as additional motivators for individuals embracing credit cards.
Breaking down the demographics, it was revealed that both Gen Y (10%) and Gen Z (9%) were more likely to resort to credit cards in response to rising costs compared to Gen X (5%).
Highlighting the potential advantages of credit cards when used judiciously, Bradney-George urged Australians to carefully evaluate their needs before applying for credit.
“Used responsibly, credit cards can be a great tool for earning rewards such as frequent flyer points and building your credit history,” she said.“But relying too heavily on them could cause you to go into a debt spiral which can be hard to bounce back from.“If you’re regularly spending more than you can pay off on a credit card, the cost of interest charges can quickly add up.”
As financial pressures persist, the survey emphasises the crucial need for individuals to make informed decisions to safeguard their financial well-being.
