Swiping away inflation: 3 million Aussies reach for credit as pressure climbs
An increasing number of Australians are turning to credit cards to cope with rising costs, according to new research by Finder.
A Finder survey of 1,063 respondents revealed 15% of Australians – equivalent to 3 million people – have taken out a credit card in the last 12 months.
The research found 6% are now relying on credit cards to manage their daily expenses.
That's 1.2 million Australians who have turned to credit as a means of easing their financial stress due to the cost of living crisis.
A further 7% don't have one, but are in the market for one, and 5% are looking to credit cards to pay off debt racked up on a previous card.
Amy Bradney-George, credit card expert at Finder, said as costs rise, more Australians are reaching for credit cards as a financial solution.
"Credit cards have become a financial crutch for a lot of people who would have previously only used one for emergencies.
"Mounting pressure on households is seeing Aussies borrowing money to keep afloat."
Getting airline points (6%) and travel fees or insurance (3%) were other reasons Australians were motivated to reach for a credit card.
Bradney-George said credit cards offer a wide range of advantages if used correctly.
"Used responsibly, credit cards can be a great tool for earning rewards such as frequent flyer points and building your credit history.
"But relying too heavily on them could cause you to go into a debt spiral which can be hard to bounce back from.
"If you're regularly spending more than you can pay off on a credit card, the cost of interest charges can quickly add up."
Gen Y (10%) and gen Z (9%) were more likely to have taken out a credit card to cope with rising costs, than gen X (5%).
Bradney-George urged Aussies to consider what's most important prior to applying for a credit card.
"Every credit card has a different mix of features, so it's important to understand what you're looking for so you can identify the right card for you.
"If you're looking to pay off existing debts, a balance transfer credit card can give you some breathing room by offering 0% interest on the balance you move to the new card, sometimes for up to 32 months.
"If you want a card for upcoming expenses, consider one that offers a low interest rate for purchases to help keep potential costs down.
"Some cards also offer 0% interest on purchases for an introductory period. But make sure you check the rate that is charged when that period ends, and have a plan to repay it before then, to avoid being stung by higher interest costs."
| Have you taken out a credit card in the last 12 months for any of the following reasons? | |
|---|---|
| Yes, to cope with rising costs | 6% |
| Yes, to get airline points | 6% |
| Yes, to get a balance transfer | 5% |
| Yes, for travel fees / insurance | 3% |
| Yes, but for a different reason | 1% |
| No, but I plan to | 7% |
| No, and I don't plan to | 78% |
| Source: Finder survey of 1,063 respondents, September 2023. Respondents could tick all that apply. |
Here are some ways you can deal with debt stress.