Why are Australians Struggling to Pay Off Credit Card Debt IN 2023?




A new study has found that one in six Australians struggle to pay off their credit card debt as the cost of living rises. The study, conducted by Finder, surveyed 603 people with a credit card and found that 16% of respondents were either over their credit limit or unable to make their minimum repayments.

The study also found that Australians had $40.3 billion in credit card debt in May, with almost half (46%) of this debt accruing interest.

Finder money expert Sarah Megginson said that the rising cost of living made it difficult for people to keep up with their credit card payments.

“The cost of living crisis is tough for everyday Australians to manage, and economic conditions are hindering consumer’s ability to pay their credit cards down,” Megginson said.

The study also found that 6% of respondents had exceeded their credit limit in the past six months.

Megginson warned that going over your credit limit can have serious consequences, including high fees, interest charges, and a drop in your credit score.

“Going over your limit is a red flag for lenders that you may be a riskier borrower, which could affect your borrowing power when you want to take out a loan or apply for a mortgage,” Megginson said.

Megginson urged Australians struggling to pay off their credit card debt to seek help from a financial advisor or credit counsellor.

“Working to pay off your debt is a smart way to go in the current economy,” Megginson said.

Tips for Paying Off Credit Card Debt

  • Create a budget and track your spending.
  • Make a plan to pay off your debt, and stick to it.
  • Pay more than the minimum payment each month.
  • Think about combining all of your loans into one with a reduced interest rate.
  • Contact your credit card company to see if they offer any debt relief programs.
  • Consult a credit counsellor or financial advisor for assistance.

Although it can be difficult, paying off credit card debt is feasible., but it is possible. By following these tips, you can get out of debt and improve your financial health.

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