A growing number of Aussies are relying on their credit cards to keep food on the table and a roof over their heads, as cost of living pressures continue to bite.
As people admit to dumpster diving for food or even skipping meals entirely, it’s no surprise that many Aussies are going into debt just to keep afloat. Now, data released by financial comparison site Finder has revealed that over the past 12 months, one in five credit card holders (about 2.2 million people) increased their spending limits.
Of those, one in 20 credit card holders say they increased their limit because they’re struggling with rising costs, while 4 per cent did so in order to afford a more expensive lifestyle
Worryingly, Finder reports that 1.75 million Australians have missed a credit card payment in the past three months.
Finder’s head of consumer research Graham Cooke said that in the current climate, credit cards had the potential to cause long term damage to people’s finances.
“Higher living costs have exposed vulnerabilities in household finances – many with little emergency savings to fall back on,” he said in a report released on Tuesday.
“Interestingly, credit card transactions have bounced back dramatically from the impact of COVID-19, and the cost of living crisis has pushed spending up well beyond where it should have been.
“Some households have suddenly upped their outgoings significantly and are turning to plastic to cover the difference.”
The research also found that hundreds of thousands of people are reportedly turning to credit cards as they run out of money before payday.
Finder found that 746,000 people are at risk of going into debt because they ran out of cash before their next pay cheque, and one in five cardholders have had to bail themselves out of an emergency expense.
Although they have their uses, credit cards are not the solution to cost-of-living pressures. While we all eagerly await the outcome of the supermarket price inquiries and the incoming tax cuts, the best thing you can do is cut spending where you can — which is easier said than done.
