How are you with your credit card payments?
Well, according to new research from Finder, an alarming number of Australians are falling behind on their credit card repayments.
In fact, based on Finder’s Credit Card Report 2024, 1 in 8 (13%) Australian credit card holders – equivalent to almost 1.8 million people – have missed a repayment in the past three months.
The research also found that 8% had missed a credit card repayment by 30 days, while 4% had missed a payment by 60 days.
A worrying 2% of Aussie cardholders had missed a credit card repayment by more than 60 days.
Amy Bradney-George, credit card expert at Finder, said credit card misuse is rife.
She further commented:
“It’s so tough right now and strain from the rising cost of living is starting to cause some long term damage to people’s finances.
Missing a payment will usually incur a late fee and interest charges and these costs can quickly add up.”
Bradney-George explained that a missed credit card payment can also hurt your credit score.
She further said:
“You only have 14 days’ grace before it will be recorded on your credit file that your repayment was late.
Details of the late payment can stay on your credit report for 2 years, and while a single late payment is unlikely to affect your credit score at first, if you continue to not pay it or miss more payments it could have a serious impact.
This can lead to higher interest rates on loans and make it harder to get approval for a new credit card or loan in the future.”
There are currently over 13 million credit cards in Australia, netting a national debt accruing interest of $18.1 billion.
Bradney-George highlights that credit cards can be a great way to manage your budget and earn frequent flyer points, but only when managed properly.
She explained further:
“Ideally, you want to pay off the total amount you owe each time you get a statement.
If money is tight, you also have the option of paying just the minimum amount listed on your statement.
As long as you pay that by the due date, you can avoid late payment fees.
But the more you can pay off the balance, the better.
Many credit cards also offer instalment plans for new purchases or for a part of your balance, which can help space out payments over a structured period of time.”
Bradney-George said customers must let their lender know if they are going to miss a payment:
“If you are up front, you could get access to hardship arrangements which can give you flexibility around meeting repayments with fewer long term consequences.”
How budgeting can help you save money:
Track your spending
Rather than “spend and forget”, a budget encourages you to track your spending.
By doing this, you’ll keep your impulse spending low and ensure you don’t overspend on certain things without realising it, like eating out (or ordering in!).
Tracking your spending also helps you spot areas where you can easily cut back and save.
Identify new ways to save
When you’ve got a budget and you’re working towards a personal savings goal, you’re going to be more motivated to find new and creative ways to save.
From doing your grocery shopping at night and going meat-free a few nights a week to selling things online and starting a side hustle, there are plenty of ways to save money to help meet your savings goals.
Get more out of your savings
Once your budget is ticking along nicely and your savings stash is starting to grow, you can use this money to generate even more savings.
Instead of leaving the money sitting in your regular bank account, consider putting it somewhere where it generates a return, such as a high-interest savings account, or an ETF.
We can assist you to determine what will work best for you and start planning for the lifestyle you want in retirement. Give us a call at 08 82314709 or send us an email at info@centrawealth.com.au.
Article courtesy of Michael Yardney’s Property Update.
