Australia | New Zealand

CREDIT SOCIETY NOT QUITE HOCKED UP TO THE HILT

Jan 2010: Personal debt levels seem to be coming off the boil, with Australians owing significantly less than they did a year ago.

Taking mortgages out of the equation, as these apply to only one-third of the population, CANSTAR CANNEX estimates the amount owing on personal loans to be 20% less than 2008.

This suggests that the credit crisis we are now emerging from has had the effect of people delaying their spending on big items, while actively paying down debt.

Credit has also been that little bit harder to get during the financial downturn with many institutions tightening access to loans.

Credit cards, on the other hand, seem to be picking up the slack, with our figures showing the amount owing is now 2.3% more than it was 12 months ago.

Credit cards are probably absorbing more day-to-day and small purchase debt but the trap with credit cards is that people don’t realise how much debt they are racking up with small, impulse buys. All of a sudden, the realization can hit that you owe, say, $8,000 on one credit card and $4,000 on another. This is where many turn to a personal loan to get on top of their finances.

After all, debt is only good if you can pay it off.

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