More than two million borrowers have gone over their limit during the pandemic as wage cuts and unemployment necessitate more credit.
A survey by Finder found 15% of credit card holders had gone over their limit and 7% were still over the limit.
One-in-four millennials said they went overdrawn during the pandemic and 11% said they remained unable to resolve the issue. From a gender perspective, 18% of women said they had gone past their credit limit compared to 13% of men.
There were over 14 million credit cards in circulation with an average credit limit of $9,892.
Credit card balances accruing interest dropped from $1,877 in February to $1,647 in June but repayments against those interest-accruing balances also dropped.
Kate Browne, personal finance expert at Finder, warned missing a payment could be a “slippery slope” for borrowers.
“Missing payments not only adds to financial stress but can also impact your credit score. Your credit score is your financial identity and is how lenders view you. If you are missing payments your credit score and your financial credibility can be put at risk,” she said.
“In light of proposed changes to responsible lending laws, it will soon be easier than ever for Australians to access credit – which could mean some people accumulating more debt than they can handle. The onus will be on borrowers to provide accurate information that shows their true ability to service a loan.”
