A growing number of Australians are struggling to make credit card repayments amid the cost-of-living crisis.
An estimated 1.8 million people, equivalent to 13% of all credit card holders, have encountered difficulties in meeting their repayment obligations over the past three months, according to comparison website Finder.
Of this group, 8% have fallen behind by 30 days, while 4% have missed payments by 60 days. Perhaps most alarming is the revelation that 2% of cardholders have experienced delays exceeding 60 days in settling their credit card bills.
Amy Bradney-George, a credit card expert at Finder, shared concerns over the prevalence of credit card misuse across the country, attributing it in part to the mounting pressures of living costs.
“It’s so tough right now, and strain from the rising cost of living is starting to cause some long-term damage to people’s finances,” Bradney-George said.
“Missing a payment will usually incur a late fee and interest charges, and these costs can quickly add up.”
Beyond immediate financial penalties, Bradney-George said the enduring impact on individuals’ credit scores, noting that late payments can tarnish credit reports for up to two years.
She warned that persistent neglect of payments could result in higher interest rates on loans and pose obstacles to securing approval for future credit cards or loans.
With over 13 million credit cards in circulation across Australia, accumulating a national debt of $18.1 billion, Bradney-George stressed the importance of responsible credit card management.
“While credit cards can serve as effective tools for budget management and earning rewards like frequent flyer points, it’s imperative to wield them responsibly,” she advised. “Ideally, cardholders should strive to settle their entire balance with each statement cycle.”
Bradney-George also pointed out the option of paying the minimum amount due, provided it’s done promptly to avoid late fees. However, she encouraged individuals to endeavor to pay off more than the minimum whenever feasible.
Recognising the challenges many face in meeting payment obligations, Bradney-George underscored the importance of open communication with lenders.
She noted that proactive engagement could lead to accessing hardship arrangements, offering flexibility in repayment schedules and mitigating long-term consequences.
