Despite rising costs from inflation and increasing interest rates, 68% of Australians remained confident in their finances for the next 12 months, showcasing resilience through actions like seeking better deals and renegotiating expenses, according to new CreditSmart research.
Elsa Markula (pictured above), CreditSmart spokesperson and CEO of the Australian Retail Credit Association, said Australians have actively sought better deals, refinanced loans, and renegotiated expenses in the past six months, with the majority remaining confident in their financial situation, despite mounting cost pressures.
“The data is showing us that Australians are faring better than expected and are being proactive about taking control of their finances given mounting pressures from high inflation and rising interest rates,” Markula said.
“As we’re now in the thick of the festive season, it’s great to see one in three people (33%) are shopping around more and comparing prices, and just under half of people (46%) are telling us they can meet their bills and credit commitments without any difficulty, which is only slightly lower than we found in December 2021 before interest rates began increasing.”
While overall financial confidence dropped slightly to 68% in the latest survey from 76% in December 2021, the majority of Australians remained proactive in controlling their finances during the festive season, with 33% shopping around more and 46% claiming ease in meeting bills and credit commitments.
Thirty-seven per cent of Australians have never checked their credit report, revealing a significant awareness gap, the CreditSmart report found. Millennials showed more proactive behaviour in this regard, with 51% having checked their credit reports in the last 12 months. Men are also more inclined to do so than women, with a percentage of 43 compared to 35.
“Australians are being smart about managing their costs and expenses, but the data is telling us that people still don’t understand the importance of knowing what’s in their credit report,” Markula said.
She stressed that gaining a better understanding of one’s financial situation through reviewing the credit report enables people to take steps to assess their circumstances properly.
“Being aware of what is on your report, and how your payment behaviour can make a huge difference to your credit health is so critical to taking control of your situation,” Markula said.
Only 34% of Australians are aware that their credit report provides a 24-month breakdown of their account payment history.
Misconceptions around financial hardship arrangements persist, hindering people from seeking necessary support. Markula highlighted a growing concern where people might mistakenly believe that seeking assistance from their lender will have adverse effects on their credit report and credit score.
“A hardship arrangement protects your credit report and credit score compared to falling behind in repayments. It also falls off a credit report after 12 months,” she said.
CreditSmart’s research showed that 21% of Australians needed assistance but did not ask for it, with 48% of survey respondents identifying a need for support, with the number going as high as 61% for Millennials.
“If you are experiencing financial hardship, the most important thing you can do is speak to your lender as soon as possible,” Markula said.
“The earlier you contact your lender, the more options which will exist to help you. Most lenders have programs and arrangements in place, including payment pauses or reductions in repayments, to help you regain financial stability and confidence in your situation.”
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