The reasons why we are going backwards financially, new CUA research shows

MANY cash-strapped Australians feel like they are going backwards financially but the good news is there are ways to get yourself out of it.

MANY households feel like they are already going backwards financially this year after overspending at Christmas and racking up too much debt.

The pressures of mounting balances on credit cards, personal loans and buy now, pay later schemes are among the key drivers pulling on our purse strings.

New research commissioned by lender CUA quizzed more than 1000 people last month and found only 21 per cent believe they have their finances completely under control.

The financial lies your partner is telling you

The lenders who have increased home loan rates in 2019

The analysis found that males feel more in control of their money (62 per cent) than females.

CUA head of member experience Todd Skerman said the research showed on average that people with personal debts owed more than $4000 on credit cards and about $28,000 on personal loans.

He also warned of the dangers of relying on buy now, pay later schemes such as Afterpay and Zippay.

“If you don’t meet the interest-free periods it’s no different to how a credit card works,” Mr Skerman said.

“Are people clear on what they are signing up for? Know when you are managing debts on higher interest rates — what you can do about it.”

Australians need to set a realistic budget to try and get on top of their finances.

The latest Reserve Bank of Australia data shows the nation’s credit card debt is sitting at a massive $52 billion and more than $31.5 billion of that is accruing interest.

Personal loan debt in Australia is estimated to be $74.8 billion.

Many credit card statements from the December spending boom have arrived by now and can impact stress levels.

Credit cards typically come with double-digit interest rates, compared with personal loans which can be lower — sometimes less than 10 per cent.

Buy now, pay later schemes boast about not charging interest rates if the strict payment criteria is met, but customers are stung with hefty fees if they are late.

Rising Tide Financial Services managing director Chris Browne said removing your credit card from your wallet was a good place to try and get back in the black.

“If you’re experiencing unwanted stress consider using a debit card instead,” he said.

“They are low or no cost and you won’t drown in debt.”

Mr Skerman said digging yourself out of debt could be as simple as going to back to the “old adage that you are best to save for something and then buy it”.

“We live in an instantaneous, instant gratification world so people’s ability to do that is supported by credit products,” he said.

CUA’s data shows about 14 per cent believe it will take them more than six months to repay their post-Christmas credit card debt.

@sophieelsworth

DIG YOURSELF OUT OF DEBT

• Set a realistic weekly budget.

• Pay down debts with a higher interest rate first.

• Use interest-free period on credit cards to wipe debt fast.

• Look for lengthy zero per cent balance-transfer deals.

• Seek professional advice.

Source: CUA.