Australians racked with debt repayment worries

The ability to repay debt continues to be a major cause of worry among Australians, according to new research by business solutions provider Veda Advantage.

The national telephone study, conducted on March 2, this year, found 75 per cent of Australians in debt are worried about their ability to make financial repayments over the next 12 months.

Veda Advantage general manager of information services and solutions Erica Hughes said the survey highlights the growing debt divide in Australia, with some Australians struggling to pay their bills on time.

She said although 62 per cent of Australians in debt said they were able to make their debt repayments, more than 16 per cent were finding it difficult to make repayments.

“A further 1 per cent, or 91,000 Australians, were unsure how they would make their repayments over the next 12 months,” she said.

The survey found inflation to be a “significant driver for consumer debt worry”, she added, with more than 55 per cent of people in debt citing rising prices as a key factor in their concern about repaying money owed.

Rising interest rates were cited as a key part of respondents’ concern about ability to make financial repayments.

Rising transport and petrol costs (55 per cent), rising food costs (50 per cent), rising health costs (44 per cent) and rising mortgage or rent costs (37 per cent) were other key factors of concern.

Australians were also found to be easing up on their consumption of new debt, with only 15 per cent owing more now, compared to 19 per cent in the previous survey in September last year.

However, the percentage citing higher interest rates (25 per cent) as the main reason for owing more debt has grown since the last survey (20 per in September 2007).

The purchase of a new vehicle (30 per cent), property purchases (27 per cent) and bigger than expected bills (24 per cent) were also reasons for owing more money than the previous year.