Cost of living woes have become so intense it is forcing a shock number of Australians to dip into their savings or rely on loved ones to keep up with their credit card bills.
Fresh research from comparison site Finder, shared exclusively with SkyNews.com.au, revealed one in four Australians were unable to make a credit card repayment over the past three years.
This equates to about 5.4 million Australians making a financially crippling choice.
About five per cent said they used emergency savings to cover the gap and another five per cent had turned to family or friends for help.
Finder’s personal finance expert Sarah Megginson said the large numbers of Australians unable to repay their credit card debt showed how acute cost of living pressures remain.
“Rising living costs mean many households are struggling to keep up with repayments,” Ms Megginson said.
“Missing a repayment can trigger late fees and interest charges that quickly snowball.”
About four per cent said they relied on missing their repayment entirely, while another four per cent said they relied on a balance transfer to shift their debt.
Others resorted to selling assets, with three per cent confessing to offloading shares or cryptocurrencies while another three per cent sold personal belongings.
Ms Megginson said Australians were taking drastic measures to repay their debt to avoid their credit score plunging.
“If your repayment is more than 14 days overdue, it’s recorded on your credit file as a late payment,” she said.
“That mark can remain on your credit report for up to two years, which could impact your ability to get approved for new credit or mean you’re charged higher interest rates in the future.”
The research comes as inflation reached 3.8 per cent in the 12 months to October, in part due to soaring housing costs and energy prices.
This follows several years of high inflation during which prices have cumulatively risen almost 23.2 per cent since the beginning of 2020.
Many cash strapped Australians turn to credit cards and short-term loans when price pressures begin to mount.
One per cent of respondents admitted to taking out a personal loan to cover their debt.
Managing credit card debt is crucial to ensuring they remain a useful financial tool, Ms Megginson said.
“If possible, aim to clear your balance in full each month, otherwise you’ll pay a hefty premium for everything you bought in the previous month,” she said.
“Setting up automatic payments is one of the easiest ways to stay on top of your credit card.
“Many cards also offer installment or payment plan options that can help spread out costs in a more manageable way.”
While many admitted to falling behind on their credit card debt, about 50 per cent of respondents to Finder’s survey said they were able to meet their repayments and another 25 per cent said they did not have a credit card.
Australians falling under the weight of their debt and struggling to make repayments should get in touch with their bank, Ms Megginson said.
“Being upfront can make a huge difference,” she said.
“Most lenders have hardship options that can give you extra breathing room and help you avoid long-term damage to your credit.”