Australians cutting back on credit

Nearly half of Australians who have debt owe less than they did 12 months ago, while only 40% owe the same amount, according to the latest Veda Advantage Australian debt report.

The report also shows that 13% of Australians now owe more money than they did a year ago.

But despite the number of Australians who are attempting to crack down on debt, 80% have some worries about their ability to pay back bills and 18% are finding it difficult to make repayments.

About 64% of Australians are able to keep their finances within budget, in a 7% increase from September, while 28% of Australians fear they will lose their employment within the year.

Chris Gration, Veda Advantage’s head of external relations, said that the report shows Australians are adapting well to tougher economic conditions but that new legislation is needed.

“The Government should be mindful of those families that are potentially caught in a debt spiral.

“Of those who owe more now than they did 12 months ago, 13% are likely to apply for credit in the next six months, and 23% are already finding it difficult to pay their bills on time.

“We know that families in difficulty are often tempted to seek additional credit, but Australia’s existing privacy legislation prevents credit providers having full insight into whether applicants are over-committed at the time they apply.”

“The Federal Government needs to introduce a draft credit reporting bill by October this year so that appropriate credit reforms can be put in place by 2010. Now is not the time to ignore responsible lending,” Gration said.