Credit shoppers vulnerable at Xmas: Survey

One in four Australians will go without household necessities and put off paying bills this Christmas in order to buy gifts for loved ones, the results of a survey by Liberty Financial suggest.

The survey sampled over 2,000 Australian credit card holders and revealed that 28 per cent of respondents have struggled to repay Christmas debts in the past and over 7 per cent are still repaying last year’s Christmas purchases.

“It’s important to watch for the signs of financial stress and avoid overextending,” Liberty Financial general manager Leo Gagic said. “We found that 68% use their credit cards to make most of their Christmas purchases but, if you’re already stretched, the high rates of credit cards may be the undoing of the household finances.” Allowing high-cost, unsecured debt to spiral out of control is a sure-fire way to get into serious financial difficulty, he said.

The survey also revealed that over 17% of credit card holders have struggled to make both credit card and mortgage repayments after Christmas. Gagic says this is reflected in the lender's experience with borrowers. “Loan delinquencies follow a seasonal trend – we record the most missed payments after Christmas and Easter when people have spent on presents or holidays that haven’t been budgeted for.”