GEN­ER­A­TION DEBT

Business First - - NEWS -

New re­search from Aus­tralia’s RateCity shows Gen­er­a­tion Y are credit crazy, and spend­ing up big.

The con­sumer study has re­vealed that Aus­tralians are now tak­ing on debt ear­lier in life, with age 20 the new av­er­age age for young peo­ple to pur­chase their first credit card. This com­pares with the av­er­age age for older gen­er­a­tions (such as those aged 65 years and older), which ap­plied for their first credit cards at age 34.

Alex Par­sons, CEO of RateCity.com.au, said it’s a wor­ry­ing trend, given that young Aus­tralians are strug­gling with higher lev­els of debt.

“Our re­search shows 42 per­cent of young peo­ple un­der the age of 24 have be­tween $10,000 and $30,000 of per­sonal debt, not in­clud­ing a mort­gage,” he said.

“Aus­tralians aged 24 and un­der are also four times more likely to get a weekly cash ad­vance from their credit card than were their par­ents’ gen­er­a­tion.

“More than half (56 per­cent) of Gen­er­a­tion Ys with a credit card have never had a $0 bal­ance on their credit card in the last year, and 63 per­cent are not aware what in­ter­est rate they are pay­ing. It’s a real con­cern, given that the av­er­age credit card rate is close to 17 per­cent – that’s a lot of in­ter­est we’re talk­ing about there,” he said.

The num­ber of credit cards on is­sue is on the rise with 117,000 in­cre­men­tal cards on the mar­ket com­pared to last year grow­ing to 15.5 mil­lion in May (ABS May data), with Gen­er­a­tion Y the most likely to sign up.

Par­sons said among the lead­ing causes of the growth in credit ap­petite among young Aus­tralians was the shift in the way we use money.

“We’re be­com­ing an in­creas­ingly cash­less so­ci­ety and that is breed­ing new at­ti­tudes to­wards the dis­pos­able na­ture of money, which is in­creas­ing the abil­ity to rack up debt,” he said.

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