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.