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8 October 2020, Sydney, Australia – Soaring unemployment and wage cuts have seen people increasingly overdrawing their credit cards, according to Finder, Australia's most visited comparison site.
A new Finder survey found that 15% of credit card holders have gone over their limit during the pandemic – equivalent to more than 2 million borrowers (2,113,350).
While 8% of card holders have paid their debt down under the credit limit, 7% are still currently over.
According to the Reserve Bank of Australia, the average credit limit per borrower is $9,892, and there are just over 14 million credit cards in circulation.
While official data shows that credit card balances accruing interest dropped during the height of coronavirus (from $1,877 in February to $1,647 in June), repayments against those interest accruing balances dropped (from 103% in February to 89% in May).
Kate Browne, personal finance expert at Finder, said that some Australians were entering a credit card danger zone.
"Even missing one or two payments can become a slippery slope that can spiral out of control quickly.
"Missing payments not only adds to financial stress but can also impact your credit score. Your credit score is your financial identity and is how lenders view you. If you are missing payments, your credit score and your financial credibility can be put at risk.
"You can keep an eye on your finances and your credit score for free by downloading the Finder app."
The research highlighted that more women (18%) went over the limit on their credit card during the pandemic than men (13%).
1 in 4 millennials (26%) were overdrawn on their credit card at some point during the coronavirus pandemic, with more than 1 in 10 (11%) still unable to resolve the issue.
Browne said that the true scale of the financial stress experienced by many Aussie adults due to coronavirus is yet to be fully felt.
"In light of proposed changes to responsible lending laws, it will soon be easier than ever for Australians to access credit – which could mean some people accumulating more debt than they can handle.
"The onus will be on borrowers to provide accurate information that shows their true ability to service a loan.
"If you are struggling to make repayments, contact your bank immediately to discuss the options available to you.
"They may be able to organise a repayment plan to help you get your debt under control."
Have you gone over the limit on your credit card during the pandemic? | |
---|---|
Yes, and I've paid it back under the limit | 8% |
Yes, and I'm currently over | 7% |
No | 85% |
Source: Finder, September 2020 survey
3 ways to keep your credit utilisation under control
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Disclaimer
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.
About Finder
Every month 2.6 million unique visitors turn to Finder to save money and time, and to make important life choices. We compare virtually everything from credit cards, phone plans, health insurance, travel deals and much more.
Our free service is 100% independently-owned by three Australians: Fred Schebesta, Frank Restuccia and Jeremy Cabral. Since launching in 2006, Finder has helped Aussies find what they need from 1,800+ brands across 100+ categories.
We continue to expand and launch around the globe, and now have offices in Australia, the United States, the United Kingdom, Canada, Poland and the Philippines. For further information visit www.finder.com.au.
12.6 million average unique monthly audience (June- September 2019), Nielsen Digital Panel