Australia’s cost-of-living crisis is hitting harder than ever, with a shocking number of people unable to keep up with their credit card repayments. New research reveals that one in four Australians have been unable to repay their credit card debt in the past three years, leaving millions scrambling for solutions. So, what’s really going on, and what can be done to manage the growing financial pressure?
The Numbers Don’t Lie
Fresh research from Finder paints a worrying picture. According to their study, around 5.4 million Australians have faced the struggle of not being able to make their credit card payments over the past three years. That’s a massive proportion of the population caught in the grip of mounting debt. In fact, five percent of respondents admitted to using emergency savings to cover their credit card bills, while another five percent turned to family or friends for financial support.
It’s no secret that the cost of living is rising. Inflation reached 3.8% in the 12 months to October, driven by the soaring prices of housing and energy. For many, turning to credit cards and short-term loans has become a lifeline just to keep up with the basics. But this reliance on credit has its consequences, particularly when repayments get missed or fall behind.
The Price of Missed Payments
Sarah Megginson, Finder’s personal finance expert, highlighted the risks of missing credit card repayments. “Rising living costs mean many households are struggling to keep up with repayments,” she said. “Missing a repayment can trigger late fees and interest charges that quickly snowball.” The situation is dire for some: about four percent of people admitted to completely missing a repayment, while another four percent used balance transfers to try and manage their debt.
Some Australians are even resorting to selling personal assets, like shares, cryptocurrencies, or even household belongings, just to stay afloat.
The Emotional Toll
It’s clear that the stress of mounting debt isn’t just financial—it’s emotional, too. People are resorting to extreme measures to avoid their credit scores taking a hit. Missing a repayment by more than 14 days can result in a late payment mark on your credit file, which can linger for up to two years. That’s two years of potential headaches when it comes to applying for loans or getting a credit card in the future.
What Can You Do?
If you’re struggling to keep up with your credit card bills, you’re not alone. It’s crucial to stay proactive. Megginson advises setting up automatic payments or using payment plan options that many credit cards now offer to make managing debt easier. “Aim to clear your balance in full each month, otherwise, you’ll pay a hefty premium for everything you bought in the previous month,” she said to Sky News. Simple tools like automatic payments can be a lifesaver, helping you avoid missed payments and the penalties that come with them.
And remember, if you’re falling behind, don’t be afraid to ask for help. Many banks offer hardship options that can give you breathing room and prevent long-term damage to your credit. The key is being upfront and communicating with your lender—chances are, they’ll be more willing to help than you think.
