16 March 2005
The debt that is getting us into trouble
Media Release
Australian consumers are spending more than they can manage during the holidays, women are better payers than men, and consumers from regional areas are better payers than those from urban areas.
These are just some of the 2004 consumer credit debt default trends released today by Dun & Bradstreet, a leading provider of receivables management and consumer credit reporting services.
"With over 160 years experience in collecting overdue accounts in Australia, we have seen evolving trends that reflect consumer spending habits and highlight the need for consumers to take better control of their credit," said Christine Christian, CEO of Dun & Bradstreet Australasia.
"Payment defaults are expensive and inconvenient for consumers and lenders alike," added Ms Christian. "So, when outstanding accounts are referred to us, we try to provide the best possible outcomes for customers and consumers."
"However, consumers need to better understand the value of a good credit history and the terms and conditions of the credit they apply for."
The amounts getting people into trouble
Surprisingly, D&B's figures for 2004 show that about half of the consumers who fell into the default trap (49.87%) were avoiding debts of less than $ 1,000.
Men versus women
In general, 2004 D&B's figures suggested that men were more likely to default on payments than women.
- Men were almost twice as likely to default on telecommunications debt as women (57% versus 30%).
- Men were more likely to default on their cable / satellite TV debt as women (57% versus 42%).
City versus country
In addition, the figures showed that people from urban areas were:
- More than twice as likely to default on their telecommunications debt as people from rural areas (68% versus 32%);
- Nearly seven times as likely to default on their utilities debt as people from rural areas (87% versus 13%);
- More than twice as likely to default on their credit card debt as people from rural areas (68% versus 32%);
- More than twice as likely to default on entertainment debt (Foxtel & Austar) as people from rural areas (68% versus 32%).
The yearly debt cycle
The placement of outstanding consumer debt with D&B was generally cyclical in 2004, with highs in January-February, May-June and September-October. This suggests that consumers are spending more than they can handle during the major holiday periods.
According to Christine Christian, the increased use of telecommunications and credit cards is presenting significant problems for many consumers.
"It's easy for people to lose track of what they are charging to their credit cards and of how many calls they are making on their mobiles," she said.
"All too often, people have no idea how much they have charged, how many calls they have made or how many text messages they have sent until they get their bill. And that's when they realize they have a problem," she added. "This is very different to utilities, for example, where consumers use only what they need and can easily manage usage rates."
"Overall, our figures show that consumers need to be much more careful about managing their credit levels and monitoring their spending habits - especially during the holidays, when temptations are high."
Danielle Woods
D&B PR Manager Australia & New Zealand
(02) 8270 2926
About D&B
D&B is the world's leading provider of business-to-business credit, marketing and purchasing information and receivables management services. D&B manages the world's most valuable commercial database with information on more than 130 million companies.
Information is gathered in 193 countries, in 95 languages or dialects, covering 186 monetary currencies. The database is refreshed more than one million times daily as part of D&B's commitment to provide accurate, comprehensive information for its more than 150,000 customers.
The Australasian operations were bought out by the senior management group in August 2001. It was the first MBO of a wholly owned subsidiary in D&B's history worldwide.
Today Lazard Carnegie Wylie owns an approximate 90% stake in DBA and the local management team a 10% stake.
Strategies for future growth include developing DBA's commercial and consumer credit referencing business; expanding its receivables management outsourcing business; maintaining its lead in the development of unique credit and risk scoring products; and developing new products specifically tailored to the Australasian market. DBA currently employs over 500 people in Australia and New Zealand.
