About 29% of New Zealanders expect to use credit cards to pay for otherwise unaffordable expenses in the coming months, a survey from credit-reporting agency Dun & Bradstreet reveals.
The survey focused on New Zealanders’ expectations for savings, credit card use, spending, and debt performance from January to March 2010, according to the agency.
The survey also found that 40% consumers ages 18 to 25 expect to use their credit card to pay for otherwise unaffordable expenses during the quarter. By comparison, about 33% of respondents ages 35to 49 expect to do so, while 19% ages 50 or older do.
The survey also reveals that 70% of families with children indicate a need to turn to credit cards in the months ahead, while 71% of families with five children expect they will be forced to use a credit card for otherwise unaffordable expenses.
The percentage of consumers expecting a need to turn to credit in the months ahead is not surprising, despite a local economy that appears to be recovering, John Scott, Dun & Bradstreet New Zealand general manager, said in a note accompanying the survey report.
“The annual Christmas credit splurge traditionally results in a significant spike in consumers struggling with their finances in the New Year,” Scott wrote. Given the pressure that the global credit crisis exerted over the previous one to two years, it is not surprising to see certain demographics struggling under the weight of their spending, he added.
However, Scott warned that the Reserve Bank of New Zealand is expected to increase rates above the lows seen during the crisis, and the banks likely would pass these costs on to consumers.
“Further increases in the cost of credit for those groups already under pressure could trigger an irreversible spiral into serious debt troubles,” he said.
