Getting stuck on the debt treadmill

FOUR out of five couples have joint bank accounts but a majority of them still like to keep separate money on the side, new research has found.

And more than 60 per cent of partners have arguments over money at least sometimes, according to the new study from Beyond Bank Australia of mostly-married couples.

It found that 82 per cent of couples have joint accounts, usually started when they get married or start living together. However, 66 per cent also have separate accounts, mainly to keep some financial independence.

Beyond Bank’s general manager customer experience, Nick May, said this was not surprising, “especially if they have established jobs and have been managing their own savings and bills for some time”.

“It’s hard to give up that sort of freedom and maybe these days, it’s not a bad idea to consider joint and separate accounts,” he said.

“Banking has become really flexible and this means it is easy for couples to manage both a joint account and a single one.”

The research found that the main reasons for couples’ money arguments were about how much was being spent, and the need to save more.

Mr May said managing money was tough, and sometimes tougher when shared with someone.

Sam Hooper and Bec Butcher have been living together for seven months and started a joint account when they set up house.

“We also have our own accounts. Bec has got money in it and I don’t,” said Mr Hooper, 28.

“I’m the spender and Bec is the saver – I buy all the things I probably shouldn’t,” he said.

“If we have an argument about money, it would be about how much we want to spend on a holiday.”

People’s Choice Credit Union spokesman Stuart Symons said couples working towards the same financial goals made things smoother.

“With both of you working to achieve them, you’re likely to get there faster,” he said.

Mr Symons said couples getting serious in a relationship should ask their partners about their debts, even though it was an awkward question.

“It’s healthy to discuss your debts at an early age because you will both understand what you’re entering into. You can then put in place steps to control the debt,” he said.

“Uncontrolled debt is one of the greatest stresses for any relationship and has been linked to many separations.” AUSTRALIAN families are facing another year on a debt treadmill, thanks to credit card complacency, research shows.

A survey by lender SocietyOne found that of the Aussies who took out a balance transfer card to pay off their debt faster, 67 per cent had neglected to cancel their existing credit cards and 12 per cent actually established an extra card for everyday purchases.

Many were in the dark on fees: 85 per cent did not know about early repayment fees and 57 per cent were unaware of transfer fees; 65 per cent didn’t know about revert rates, and 57 per cent did not realise interest was charged on new spending.

Those with balance transfer cards had an average $5907 of debt and took 14 months to pay it off, despite most having an interest-free period of 12 months or less. Nearly a quarter (24 per cent) were unable to pay their balance off in the interestfree period.

SocietyOne spokeswoman Maria Loyez blamed a lack of education and transparency.

“Consumers are not being properly educated … and are leaving themselves open to temptation by not cancelling their old card,” Ms Loyez said.

“Many balance transfer cards have a maximum transfer amount that is less than 100 per cent of the available credit limit, so you would need to take out a new card with a higher limit.”

“A consumer with a $6000 balance and 12-month interest free period would need to repay $500 each month to avoid being hit with higher rates of up to 22 per cent after the interest-free period,” Ms Loyez said. “That’s before you add on any fees.”

RBA figures showed consumers spent around $30 million on credit cards over Christmas, while OECD data shows Australia is one of the top five countries for personal debt.

Wealth Within chief analyst Dale Gilham said debt levels were a concern.

“We are stuck on a debt treadmill and many of us don’t know how to get off,” he said. “Identify you have a problem with debt, cut back on nonessential spending … and funnel the cash freed up into paying down your bad debt.”