Australians more comfortable with credit card debt

Are Australians getting better at managing their credit card debt? The results of the latest ING DIRECT Financial Wellbeing Index seem to indicate we’re heading in that direction, with six in ten Australian households now saying they’re ‘very comfortable’ with the amount they owe – the highest rating since the survey began in 2010.

This trend for paying down debt is one which has been emerging for quite some time. Our Financial Wellbeing Index has shown that comfort with short term debt has been improving, as Australians show more consideration around how they spend their cash. Now households have an average of 1.7 credit cards, down from 1.9 one year ago, and 17% have no credit card whatsoever.

Comfort with household savings is also on the rise, with households not only having more cash in the bank, but also saving through other means. For example, despite interest rate reductions, one third of mortgage holders are choosing to pay down ahead of time, effectively saving money through reducing interest over the longer term.

This behaviour may go some way towards explaining the increase in comfort with mortgages overall, with two in three households saying they’re very comfortable with their mortgage debt – the highest comfort level recorded to date.

Yet for many people, paying household expenses remains a challenge. Despite household income remaining steady, the rising cost of living has put additional pressure on household budgets when it comes to paying the bills. Around 6% of respondents said it was almost impossible to make payments on time.

Despite this, all measures in the ING DIRECT Financial Wellbeing Index are on the up, with financial comfort levels the highest overall since tracking began in 2010. This is further evidence that Australians are paying closer attention to managing their personal finances; adapting their behaviour to ensure their finances work for them in the longer term.


7 thoughts on “Australians more comfortable with credit card debt

  1. The Studio

    Australians are not comfortable with this. The only way we can recover is by not using credit cards ever again. Not one person in my very large family now uses credit cards or will again. We have woken up.

    1. James

      Get a credit card only for online transactions. The problem is ppl get credit card for the wrong reason. Of you use it to put yourself in debt then you are not doing it right.

      As long as you pay your dues on time, there is no problem with credit cards.

    2. Kaabooom

      It’s all in how you use them (and some discipline). Abuse them and yes, you’re better off not having one at all. The maxim here is simply to live within your means – don’t spend more than you earn! It is very possible to actually use a credit card to one’s advantage. Get one with a low (or no) annual fee with interest-free days that earns rewards / points, pay if off in full every month (set up a recurring payment so it always happens), and use the card for its convenience factor and benefits. In this case the interest rate is inconsequential. You CAN play it right! If everyone used credit cards this way, the banks would be forced to stop offering them (or change the rules). They are relying on the 10 to 20% interest you’re paying to make their killing. If you need a kick-start, get one offering zero per cent interest on balance transfers first.

    3. silverman66

      No need to generalise with using Australians as a whole. I use a credit card, and I pay it in full every month, and never pay interest. I get a shedload of points from transactions and redeem a free return flight each year to see other cities in Aus or NZ. Credit cards have their advantages, you just need to be smart about it.

  2. Roberto Markham

    Credit cards are an abomination. It is all very well to talk about “how one uses them” but let’s be honest, people lack self-control when it comes to money. The Labor Governments past and recent have taught people that it is all right to spend, spend, spend and then borrow one’s self out of debt. I had a card for a number of years and kept it maxed out but finally realized that all I was doing was providing income in the form of interest to the supplier. A number of years ago I changed to a debit card and now have no debts BUT I do have cash in the bank. That is the great difference and life is easier.

  3. Shirley

    You can get a credit card plenty of places. I have one. But I love ING because I have a set amount of my salary paid into my ING Orange every day account, which allows me to use any ATM in Australia without fees. I also get a rebate on purchases. And the money I use when I tap and go is mine. So, the credit card is used for those auto deductibles like gym fees, phone etc. and easier to manage. I think we have gotten so used to using a credit card that it is very refreshing to rediscover cash, which is what a tap and go card is, with ING.


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