Credit card crisis: 1 in 3 default on repayments
- One in three (32.4%) Australians have defaulted on their credit card repayments
- Men are more likely to miss a credit card repayment compared to women
- Tips on how to manage your credit card debt more efficiently
16 November, 2016, Sydney, Australia – Nearly one in three Australians (32.4%) have defaulted on their credit card repayments, with men most likely to miss repayments compared to women, according to finder.com.au, Australia’s most visited comparison website1.
Almost one in seven (14.4%) Australians have defaulted on a personal loan, while over 10.3% of borrowers have been behind on their mortgage.
The finder.com.au survey of 2,005 Australians found 17.5% had missed one credit card repayment, while a further 14.9% had missed more than one.
Bessie Hassan, Money Expert at finder.com.au, says repeat offenders risk damaging their credit score.
“You could also be penalised for not sticking to the repayment requirements by paying late payment fees and also getting a black mark against your credit file.
“A damaged credit history could mean you have trouble qualifying for a loan in the future as this is how creditors assess your ability to manage and repay debt.”
Ms Hassan warns borrowers to speak up in their struggling to pay off their personal debt.
“If you’re struggling to meet repayments talk with your provider to negotiate the outstanding debt before it impacts your credit score,” she says.
Ms Hassan urged borrowers to assess whether they realistically have the ability to repay the debt and still meet other financial obligations.
“If you have any doubts about your ability to meet your repayments then you may want to consider other credit options, such as borrowing from family.”
Men vs Women
- Women were more likely to have missed a home loan repayment more than once at 7.0% compared to men at 5.5%
- More than one in six men (15.7%) had missed a personal loan repayment, compared to 12.6% of women.
- 19.9% of women had never had credit card debt, compared to 11.8% of men
How to manage your personal debt
- Don’t overextend yourself. As the festive period approaches, it may be tempting to take out additional forms of debt, such as a personal loan or a second credit card, but before you do, carefully review your needs and decide how much debt you can comfortably service. If you’re unsure of the amount you can borrow, speak to an accountant or a finance broker so you don’t wind up missing repayments and damaging your financial position.
- Consolidate debt to regain control. If you’re unable to meet your financial obligations for multiple products, consolidating your debt may help you stay on track as it will mean that several accounts are rolled into one manageable repayment. Consolidating debt into a loan with a lower interest rate can be a good way to pay down your debt more efficiently.
- Prioritise high-interest debt. It’s sensible to repay high-interest debt first so you can work to minimise your interest repayments. However, just make sure you’re still meeting the minimum requirements for each account.
- Set up automatic transfers. Managing several accounts can become easier if you set up automatic transfers from a nominated account to your credit provider, that way, you don’t miss a beat.
- If in doubt, approach your lender. If you suspect that you may be unable to meet a monthly repayment, approach your lender and explain the situation as they may grant you a one-off extension.
You can stay up to date with credit card trends and statistics at https://www.finder.com.au/credit-cards/credit-card-statistics.
1 Experian Hitwise 2015
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).