‘Quite frightening’: Cost-of-living crisis drives Aussies to rely more on credit cards
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As the cost-of-living crisis continues to grip Australia, an alarming trend has emerged.
One in six Australians are resorting to using credit cards to cover everyday expenses, pushing themselves further into debt.
This financial strategy, while seemingly a quick fix, can have long-term consequences that could exacerbate the financial strain on households.
Recent research has revealed that 27 per cent of Australians are finding it harder than ever to make ends meet.
This financial pressure is particularly pronounced in South Australia, where 34 per cent of residents are struggling, and Queensland, where 30 per cent are feeling the pinch.
The data was released by Good360, an organisation that redirects unsold essential products such as clothing and furniture to charities.
They also found that nearly one in 10 people surveyed (8.5 per cent) have sought help from a charity or are considering doing so due to financial pressures.
Alison Covington, Good360 Australia's Managing Director, described the increased reliance on credit cards for basic amenities as 'quite frightening'.
‘What we’re seeing is that everyday Australians are needing more help than ever,’ she said.
‘Previously, it was when we were having crises and disasters, like fire, flood and Covid, now the cost-of-living crisis is hitting all over Australia.’
'We've had interest rate hikes, people struggling with fuel costs and electricity,’ she continued.
‘It's a really telling sign in the economy that people have resorted to credit cards and pay-later schemes–it's quite frightening in a country like ours that people are really struggling,’ she added.
This finding is also supported by previous research by Finder last November, which revealed that 15 per cent of Australians have taken out a credit card, while 7 per cent are in the market for one right now.
Meanwhile, the number of people relying on their credit cards to cover daily expenses is at 6 per cent, and those that use it to pay off previous debt stand at 5 per cent.
The demand for non-food aid has reached record levels, with Good360 recording a fourfold increase in charities seeking support.
People were forced to make tough choices between everyday necessities like toiletries and cleaning products, adding to the stress on families.
‘It’s very stressful on families,’ Covington said.
The latest inflation figures from the Australian Bureau of Statistics show that the annual Consumer Price Index (CPI) is gradually dropping from its peak of 7.8 per cent.
However, the annual movement measured in January was still 4.1 per cent, above the Reserve Bank of Australia’s target of 2 to 3 per cent.
Covington also called for more government support to redirect the 'staggering' $2.5 billion of goods that go to landfills.
While there is funding for food programs that prevent excess waste, she believes similar plans need to be put in place for the distribution of products.
'We know that waste in the retail sector is an issue keeping many executives up at night,' she said.
‘With sales continuing to flatline and seasonal stock changes about to hit as summer ends, many retailers are faced with the challenge of sustainably managing mountains of unsold stock.’
'Governments, retailers and charities need to work together and get smart about these challenges. Instead of letting mountains of essential household goods go to waste, let's get them to Australians who really need them.'
Have you found yourself relying on credit cards to cover everyday expenses? Share them with us in the comments below.
One in six Australians are resorting to using credit cards to cover everyday expenses, pushing themselves further into debt.
This financial strategy, while seemingly a quick fix, can have long-term consequences that could exacerbate the financial strain on households.
Recent research has revealed that 27 per cent of Australians are finding it harder than ever to make ends meet.
This financial pressure is particularly pronounced in South Australia, where 34 per cent of residents are struggling, and Queensland, where 30 per cent are feeling the pinch.
The data was released by Good360, an organisation that redirects unsold essential products such as clothing and furniture to charities.
More Aussies are relying on credit cards for their daily expenses. Credit: Freepik
They also found that nearly one in 10 people surveyed (8.5 per cent) have sought help from a charity or are considering doing so due to financial pressures.
Alison Covington, Good360 Australia's Managing Director, described the increased reliance on credit cards for basic amenities as 'quite frightening'.
‘What we’re seeing is that everyday Australians are needing more help than ever,’ she said.
‘Previously, it was when we were having crises and disasters, like fire, flood and Covid, now the cost-of-living crisis is hitting all over Australia.’
'We've had interest rate hikes, people struggling with fuel costs and electricity,’ she continued.
‘It's a really telling sign in the economy that people have resorted to credit cards and pay-later schemes–it's quite frightening in a country like ours that people are really struggling,’ she added.
This finding is also supported by previous research by Finder last November, which revealed that 15 per cent of Australians have taken out a credit card, while 7 per cent are in the market for one right now.
Meanwhile, the number of people relying on their credit cards to cover daily expenses is at 6 per cent, and those that use it to pay off previous debt stand at 5 per cent.
The demand for non-food aid has reached record levels, with Good360 recording a fourfold increase in charities seeking support.
People were forced to make tough choices between everyday necessities like toiletries and cleaning products, adding to the stress on families.
‘It’s very stressful on families,’ Covington said.
The latest inflation figures from the Australian Bureau of Statistics show that the annual Consumer Price Index (CPI) is gradually dropping from its peak of 7.8 per cent.
However, the annual movement measured in January was still 4.1 per cent, above the Reserve Bank of Australia’s target of 2 to 3 per cent.
Covington also called for more government support to redirect the 'staggering' $2.5 billion of goods that go to landfills.
While there is funding for food programs that prevent excess waste, she believes similar plans need to be put in place for the distribution of products.
'We know that waste in the retail sector is an issue keeping many executives up at night,' she said.
‘With sales continuing to flatline and seasonal stock changes about to hit as summer ends, many retailers are faced with the challenge of sustainably managing mountains of unsold stock.’
'Governments, retailers and charities need to work together and get smart about these challenges. Instead of letting mountains of essential household goods go to waste, let's get them to Australians who really need them.'
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