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50% of Australians and families relying on credit cards to pay for food

4 July 2016

HALF OF ALL AUSTRALIANS AND FAMILIES NOW RELYING ON CREDIT CARDS TO PAY FOR FOOD AND EVERY DAY EXPENSES ACCORDING TO NEW GALAXY SURVEY

Australians are struggling to cope with the cost of basic necessities with many now dependent on credit cards to pay for food. In addition, the majority of Australians are so strapped for cash that they are unable to pay off their credit cards in full each month.

A new Galaxy survey  of 1,000 people nationwide conducted on behalf of Fox Symes, the leading provider of debt solutions in Australia, found half of all Australians (52 per cent) are forced to use their credit card to pay for every day costs such as their electricity bills, phone charges and groceries because they don’t have the cash available. As many as 2.9 million Aussies say they have to do this frequently.

Alarmingly, given the reliance on plastic, the majority of Australians with credit cards (58 per cent) are not paying off their credit cards in full each month resulting in high interest charges on their outstanding debts. As many as one in four (25 per cent) say they rarely or never pay off their card in full. Those from lower income households (64 per cent) are much more likely to struggle with this compared to higher income earners (46 per cent).

“It is concerning that many people are relying upon their credit cards to pay their bills.” says Fox Symes director Deborah Southon. “People are not coping and this is compounded by wage stagnation and rising costs. It is so important that people budget accordingly and look for any way possible to cut back on expenses.”

In particular families are really suffering. Some 59 per cent of people with children say they rely on credit to pay for their basic needs compared to 48 per cent of people without children or those whose children do not live at home.

A significantly lower proportion of parents (31 per cent) are able to pay off their credit card bills without fail each month in comparison to those who are child-free (46 per cent).

The study also found that 55 per cent of men, many of whom are likely to be the family’s main breadwinner, regularly resort to paying everyday expenses with credit because they don’t have the cash available. Some 48 per cent of women do the same, with 18 per cent of women also more likely than men (8 per cent) to say they never pay off their monthly bill in full.

“Many families are feeling pressure. ” Ms Southon says. “Australia is an expensive place to live and this can drive families with dependent children into debt.”

Reflecting the pressures being faced by young people today including flat wages, job insecurity and high costs of living and housing, 58 per cent of those aged 18 – 49 admitted to relying on credit to pay basic bills compared to 43 per cent of those aged 50 and over.

A huge two thirds (67 per cent) of people aged 18 – 49 admitted that they are more likely than those aged 50 plus (47 per cent) to not pay off their credit card fully each month.

"Many young people learn about money through trial and error,” says Ms Southon. “Budgeting is a learned skill and can take years to master.  Many young people pay little attention to budgeting  because their focus is often on  having fun and spending money on socialising and holidays. On top of that they are tempted by easy access to credit and pay day loans.”

Ms Southon says all too often credit cards are seen as an easy fix to people’s money problems. “Once you get behind on payments it can become a spiral that’s hard to escape. It’s easy to quickly rack up huge interest charges and debts. If people have multiple credit cards they should immediately pay down the card with the highest interest rate first. They then need to effectively manage just one card, or none at all. Living within your means is the only way to get ahead.”

About the research The study was conducted by Galaxy Research between 14-17 April, 2016. The survey was administered online amongst a nationally representative sample of 1,000 Australians aged 18 years and older covering: NSW, ACT, VIC, TAS, QLD, SA and WA. 

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