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Finder’s Credit Card Report: Rising costs mean Aussies more reliant on plastic

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Credit cards are becoming a vital tool for many Australians trying to cope with soaring costs, according to a new report by Finder.

Finder's Credit Card Report 2024, which combines aggregate credit card data from the Reserve Bank of Australia (RBA) with data from Finder's Consumer Sentiment Tracker (CST), has uncovered the impact of rising costs on Australian credit card use.

Below are some of the key findings from the report;

Millions are changing their limit to stay afloat

  • 1 in 5 Australians (21%) with a credit card have changed their limit in the past 12 months – that's 2.2 million people.
  • Worryingly 1 in 20 credit card holders have increased their limit on their existing card because they are struggling with rising costs.
  • The report found a further 4% have increased their credit limit in order to afford a more expensive lifestyle.
  • A small number of card holders (3%) have decreased their limit to reduce temptation or to increase their chance of approval on a home loan.
  • After a significant downturn in credit card use between May 2017 and April 2022 – spending on plastic hit an all-time high of $35.3b in January 2024.

Graham Cooke, head of consumer research at Finder, says:

  • "Higher living costs have exposed vulnerabilities in household finances – many with little emergency savings to fall back on.
  • "Interestingly, credit card transactions have bounced back dramatically from the impact of COVID-19, and the cost-of-living crisis has pushed spending up well beyond where it should have been.
  • "Some households have suddenly upped their outgoings significantly and are turning to plastic to cover the difference.
  • "Aussies should be careful to keep track of spending on plastic and pay it off in full every month to avoid interest charges," Cooke said.

Australians overspend for sign-up bonuses

  • Nearly half of credit card holders (46%) who collect rewards points struggle to satisfy minimum spend requirements, according to the report.
  • 1 in 6 (16%) admit they didn't meet the spending requirements and missed out on bonus points on the credit card they signed up for.
  • 1 in 8 (12%) admit they met the spending requirement stipulated by a rewards credit card but ended up in debt.
  • A further 18% had to spend more than usual to qualify.

Graham Cooke, head of consumer research at Finder, says:

  • "Rewards credit cards can be an extremely powerful financial tool but can quickly become a nightmare if you can't comfortably meet the minimum spend requirements.
  • "Check what spending counts towards those bonus points. Things like paying off your tax bill and your rego don't count so always read the fine print.
  • "The interest charged on late payments basically negates all the rewards you'd otherwise earn so be sure to pay off the balance in full each month."

Many are missing their repayments or getting caught out before payday

  • The report found 1 in 8 (13%) credit card holders have missed a repayment in the past three months.
  • That's 1.75 million Australians who have missed a payment.
  • Nearly 1 in 10 (7%) have turned to plastic after running out of money before payday. That equates to 746,000 Australians who risk going into debt because they've run out of cash before their next pay cheque hits.
  • A worrying 1 in 5 (21%) cardholders got caught out by an emergency expense and had to reach for their credit card to bail themselves out.

Graham Cooke, head of consumer research at Finder, says:

  • "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.
  • "Missing a payment will usually incur a late fee and interest charges and these costs could quickly add up.
  • "A missed payment can also hurt your credit score.
  • "Ideally, you want to pay off the total amount you owe each time you get a statement.
  • "If money is tight, you also have the option of paying just the minimum amount listed on your statement. As long as you pay that by the due date, you can avoid late payment fees. But the more you can pay off the balance, the better.
  • "Finally, for those paying high interest, moving your debt to a balance transfer card is a great option and will give you an interest-free window to pay it off – though resist the urge to spend more."

Click here to read Finder's Credit Card Report 2024.

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