Paying by plastic: More than 60% of Aussies rely on credit for household bills
- New research shows 61% of Aussies pay for household bills on credit cards.
- National credit card debt hits $51.7 BILLION: almost 1 in 4 can’t pay off balance each month.
- How to manage credit card debt arising from bills.
30 May, 2016, Sydney, Australia – Almost two thirds of Australians are relying on credit cards to pay for household bills, a survey by Australia’s biggest credit card comparison site, finder.com.au, reveals.
The survey of 1,022 Australians found men were more likely than women to pull out the plastic to pay for bills.
Bessie Hassan, Money Expert at creditcardfinder.com.au, says this comes as Australia’s credit card debt swelled to $51.7 billion in March 2016, up from $50.9 billion in January according to figures from the Reserve Bank of Australia.
“While the majority (77%) have the means to pay off their credit card balance each month, that still leaves almost one in four Australians (23%) with credit card debt hanging over their heads with utility and insurance bills putting more pressure on debt-ridden families,” she says.
“While some households prefer to pay for bills using credit card to earn rewards or frequent flyer points, for others it’s the only way to keep their services connected.
“We know there are over four million people who are unable to pay for these bills and they are relying on credit cards to get them out of trouble. But it’s a short term solution that can lead to long term pain.
“Everyday bills are not something you should be getting into debt for – if you are, you need to evaluate what other areas of your life you can cut back on.”
Surprisingly, Baby Boomers (46%) were the most likely to pay for household bills with a credit card, followed by Generation X (34%).
Worryingly almost half (47%) of households in the lowest income bracket (under $50,000) pay for households bills on credit card.
“These bills can be hundreds or even thousands of dollars – especially those which only come in quarterly – and if unprepared, low income households could struggle under the weight of that debt for years to come.”
Those in New South Wales (30%) were most likely pay for bills on credit, followed by Victoria (25%) and Queensland (22%).
Australians need to find better deals to cut household bills, Ms Hassan says.
“We urge Aussies to do an audit on their household bills – spend time comparing options and find ways to save money. A bit of effort can save you hundreds, or even thousands, of dollars in the long run.
“If you can’t afford to pay your household bills, investigate whether you can go on a payment plan with your provider or get an extension rather than getting into more debt.”
How to manage credit card debt arising from bills
0% balance transfers
If you are dependent on your credit card to pay your household bills but are struggling beneath the weight of your debt, abalance transfer credit card might be the solution. A card with a 0% or low balance transfer offer, could allow customers to repay their balance without accruing any interest. This card should be reserved for consolidating your debt rather than paying your bills.
For those who regularly pay for household bills on credit card - make sure you are not paying too much interest. The higher the interest rate the harder it will be to repay the outstanding balance. This is when debt can snowball. Search for a credit card with a 0% purchase rate for a promotional period. Bare in mind that this introductory rate will revert back to the standard rate when the promotional period finishes, so it’s imperative to know what this rate is so you’re not caught out. If you don’t struggle to repay your debt each month, you might want to consider a card with an ongoinginterest-free days offer.
Top credit cards with 0% intro rate on creditcardfinder.com.au
For further information
The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com.au's review pages for the current correct values.
finder.com.au is Australia's most visited comparison website and has helped over 4.8 million Australians find better credit cards, home loans, life insurance, shopping deals and more since 2006. finder.com.au compares 250 credit and debit cards from 31 providers, over 300 home loan products, and information from 13 life insurance providers as well as online shopping promo codes, mobile phone plans, travel insurance and more. One Australian every five minutes is using finder.com.au to find better (Source: Google Analytics).