Debt dilemma: Average Australian has $20,238 in personal debt
Millions of Australians are struggling with a mountain of personal debt, according to new research by Finder.
A Finder survey of 1,079 respondents revealed the average Australian now has $20,238 in debt spread across consumer loans and credit cards (this debt does not include mortgages).
That's more than $70 billion in personal debt nationwide.
This is up from $18,301 a year ago – an 11% spike in only 12 months.
According to Finder's Consumer Sentiment Tracker, the average Aussie with each respective type of debt carries $1,948 in credit card debt, $6,920 in personal loan debt and $11,370 in car loan debt.
Amy Bradney-George, personal finance expert at Finder, said the skyrocketing cost of living has forced many Aussies to borrow money just to pay for essentials.
"A significant number of people are having to turn to credit cards, buy now pay later services and personal loans in order to cover day-to-day expenses like food and electricity.
"With inflation at an all-time high, debt is making it even more stressful for people to put food on their tables."
Finder data shows 54% of Australians have a credit card as of May 2023 – the equivalent of 10.9 million people.
Just over 1 in 7 (14%) Aussies currently have a personal loan (equivalent to 2.8 million people), while the same proportion have a car loan.
Separate research from Finder reveals 30% of Australians are "extremely" stressed about their current financial situation – up from 22% at this time 12 months ago.
That's a staggering 6.1 million Aussies who are under enormous financial strain.
Bradney-George said there are fears it could get worse as households continue to face rising interest rates and inflation.
"Debt can quickly get out of control and lead to bigger financial difficulties.
"When you are struggling to 'pay off the past', it stops you from saving for the future."
Bradney-George urged households to break up with debt.
"Contact your providers to see if you can set up a payment plan that fits with your income.
"If your circumstances have changed, you can also talk to your bank's hardship support team about different options such as payment pauses.
"You could also shop around for better rates or consider debt consolidation to help manage repayments."
Bradney-George said now is the time to protect your financial health and credit score.
"Failing to pay off debt can damage your credit score which makes a bigger mess in the long run.
"If you're overwhelmed by debt, you can also get free financial counselling by calling the National Debt Helpline on 1800 007 007."
| How much debt are you carrying? | Proportion of Australians who have this product in May 2023 | National total | |
|---|---|---|---|
| Credit card (balances accruing interest) | $1,948 | 54% | $18.6 billion* |
| Personal loan | $6,920 | 14% | $19.6 billion (est) |
| Car loan | 11,370 | 14% | $32.3 billion (est) |
| TOTAL | $20,238 | $70.5 billion | |
| Source: Finder survey of 1,079 respondents, April 2023. |
*Finder analysis of RBA credit card data, April 2023
Do you know your credit score? Find out for free here.
