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‘Concerning’ cash act millions of families are turning to that could make them ‘spiral out’


Australians are gravitating towards short-term lending services but going without essential living items, as the high cost of living spreads thin the finances of many households.

Since February 2022, enquiries for Buy Now Pay Later (BNPL) services are up 28 per cent, interest in credit cards is up 31 per cent and enquires about personal loans up 36 per cent, according to a new report from credit bureau Experian.

“The increase over the last couple of years is definitely a concerning trending,” Experian director of client advisory credit services Charlotte Rankin said.

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“Consumers are trying to manage their cash flow, spread their payments (and) spread their costs out.”

It comes as the Rerseve Bank of Australia increased the cash rate to its highest level in 11 years earlier this week, in an attempt to curtail inflation.

The Salvation Army’s financial counselling service, Moneycare, has experienced growing demand from people needing support because of spiralling debts.

The service received 15 per cent more calls for financial support in May compared with the year before.

National manager Kristen Hartnett said counsellors were hearing that clients were taking out short-term loans and going without medication, meals, or important services such as home and car insurance.

Australians are expressing an interest in short-term loans, as the cost of living continues to hit families. Credit: AAP

She stressed against using short-term loans, which often had high-interest rates, as a solution.

“You don’t handle a difficult situation by going into more debt. The debt can easily spiral out,” Harnett said.

“If you’re already struggling to make ends meet, reach out.”

The Salvation Army last month released a survey of 1700 clients as part of its Red Shield Appeal, revealing 50 per cent of clients could not afford healthcare, 52 per cent were skipping meals to save money and 75 per cent were experiencing housing stress.

The report also captured the stories of Australian families struggling in the current financial climate.

“I have lost 40kg in the last nine months because all my money goes on keeping a roof over my kids’ heads and trying to keep them in a safe place,” one 55-year-old mother said.

Another parent, 29, said: “I eat the leftover food from my child’s meal, if there is any, or I just don’t eat. I wait at the school carpark from drop-off until pick-up if I’m short on fuel. I have sold most of my own clothing to buy my children clothes.”

Harnett said anyone experiencing financial stress and needing advice can call The Salvation Army.

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Source: 7News