One in four Aussies concerned about their Christmas spending
22 January 2009
The latest D&B National Consumer Credit Expectations Survey shows�
Outlook for March quarter 2009
- Eighteen per cent of Australians expect to apply for new credit or a credit limit increase
- One in five (19%) households expect their level of debt to increase in the coming months
- Seventeen per cent of Australians anticipate a need to use credit cards to pay for bills they otherwise couldn't afford
- One in four (25%) households are concerned about the amount of money they spent at Christmas and 7% expect they will struggle to pay their bills as a result
The differences between young and old, and high and low income households are becoming increasingly prevalent, with Dun & Bradstreet's latest Consumer Credit Expectations Survey revealing that young Australians and high income households have significantly higher expectations for new credit applications and lower debt levels than their older and lower income counterparts.
The D&B survey*, which focused on Australians' expectations for credit applications, credit usage and debt performance over the March 2009 quarter, reveals that an increasing number of high income households ($70,000+) are looking to take on additional credit in the months ahead, with one in four (25%) expecting to make an application for new credit or a credit limit increase. This figure drops eight percentage points (to 17%) for middle income households ($30,000-69,999) and a further ten percentage points (to 7%) for low income (<$30,000) households.
Fourteen percentage points separate high and low income households' expectations for increased debt levels. Thirty per cent of low income households anticipate higher debt levels in the coming months while only 16% of high income earners share this expectation. Conversely, 31% of high income earners expect to lower their debt levels by the end of March 2009. This drops fifteen percentage points (to 16%) for middle income households and a further eight percentage points (to 8%) for low income households.
Concerns about Christmas spending reveal little difference between the income brackets (each at around 23-24%) however repayment expectations expose the disparity between the groups. Just 4% of high income households indicate they will struggle to pay their Christmas bills - this figure triples for low income households.
According to Christine Christian, D&B's CEO, the impacts of the global credit crisis and the slowing Australian economy are creating a divide between different demographics.
"The differences between the haves and have nots are evident in the credit and debt expectations of Australian families," said Ms Christian.
"The survey shows that high income families and young people are comfortable taking on new debt despite tougher economic conditions and more stringent lending standards. The same demographics are also seeking to rein in their debt, which is a positive sign amidst these tough economic conditions.
"However low income households and older Australians are doing it tough and as a consequence they are anticipating higher debt levels in the months ahead."
Examining the data by age group reveals that 31% of 18-34 year olds intend to make an application for new or increased credit in the March 2009 quarter. This figure drops twelve percentage points (to 19%) for the 35-49 age group and a further twelve percentage points (to 7%) for the fifty and over age group.
A greater number of young Australians expect to lower their debt levels in the coming months, with fifteen percentage points separating the expectations of young and old. Twenty seven per cent of 18-34 year olds anticipate lower debt by the end of March while 12% of those aged 50 and over share the same expectation. Conversely, 12% of young people and 24% of older Australians expect to increase their level of debt in the coming months. Eighteen per cent of 35-49 year olds anticipate increased debt.
Despite their intentions for decreased debt levels, the 18-34 age group (and the 35-49 bracket) have higher intentions for use of credit to cover bills than their older counterparts. Twenty per cent of 18-34 (and 35-49) year olds compared with 12% of those aged fifty and over have this expectation.
Younger people also showed greater levels of concern about Christmas spending and their ability to pay their bills as a consequence. Seven percentage points separate the younger groups from their older counterparts, with one in four older Australians indicating concern about Christmas spending. Just five per cent of those aged fifty and over indicated they would struggle to pay their bills while 9% of 18-34 year shared this concern.
"The survey indicates that older Australians are more concerned about their credit and debt management than their younger counterparts and accordingly they were more conservative in their Christmas spending," said Ms Christian.
"Younger Australians need to be careful with their use of credit to avoid their debts spiralling out of control. Paying bills with credit can be an early indicator of debt stress and in an environment where banks are only willing to lend to those without adverse data on their credit file, consumers need to be particularly stringent with their financial affairs."
Australians residing in city areas are showing more significant signs of future debt struggles than their country-based counterparts. Eighteen per cent of city dwellers anticipate a need to turn to credit to cover otherwise unaffordable bills in the months ahead - this figure drops five percentage points (to 13%) for country dwellers.
Despite similar levels of concern regarding Christmas spending (25% for city dwellers and 24% for country dwellers), differences between the two groups are evident in their expectations regarding their ability to pay their associated bills. Nine per cent of city dwellers anticipate they will struggle to pay their Christmas bills - this drops to 4% for country dwellers.
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