The latest OECD figures indicate that Australian household debt to Australian net disposable income stands at 217.1%. In other words, for every $1 a household earns annually, it correspondingly owes $2.17. Only Switzerland has a higher household debt ratio. While Australians relinquished over 100,000 credit cards in the second half of 2020, figures show personal debt rose significantly. One factor may be the relaxation of lending rules by banks such as the Reserve Bank of Australia. Lenders have shown an appetite to keep the economy buoyant, keeping interest rates low, fewer credit checks, and business credit availability.
Nonetheless, while credit can be a blessing for many, it can equally prove to be a curse. As Australia continues to grapple with the consequences of the Covid pandemic, a total of 877,600 were listed as unemployed in January. Therein, the temptation of easy credit may lure many into credit agreements they cannot afford. What help is available if you or someone close to you is struggling with debt?
We appreciate you may feel anxious, lost, and or overwhelmed. However, help is at hand. Here is a list of resources available to Australians with financial worries. – The National Debt Helpline (NDH) is a free service provided by Financial Counselling Australia (FCA) and contactable on 1800 007 007. – The NDH’s website www.ndh.org.au offers comprehensive guidance on debt solutions, counselling, borrower’s rights, and budgetary advice. In addition, the website provides a range of Covid-19 resources that includes information on available financial assistance and home loans and considerations for borrowers. – The FCA is a not-for-profit organisation that advocates for a fairer marketplace and works to improve hardship processes for people in financial difficulty, hosting a website at www.financialcounsellingaustralia.org.au – Lastly, if you feel you have been misrepresented or mis-sold a financial product, you can contact the Australian Financial Complaints Authority (AFCA). You can call the AFCA on 1800 931 678 or refer to www.afca.org.au. They have a dedicated Covid-19 helpline on 1800 337 444. The site also contains an informative section entitled ‘Helpful information and next steps for people affected by the coronavirus pandemic’ that helps borrowers reach an agreement with their financial firm(s). The AFCA is impartial, independent, and can award legally binding compensatory decisions to consumers wronged by lenders. As the vaccination programme rolls out across the territories and Covid-19 rates continue to tumble, our hope is that no Australians are left with a legacy of debt. Remember, there is always help available.