Credit purchases of basics tipped to rise

A survey has shown that almost one in three families with children expect to be using a credit card to finance their household debt in the next three months.

The Dun and Bradstreet survey shows the figure is up 21 per cent from the last quarter.

A spokesman for the credit reporting company, Damien Karmelich says credit card use is on the rise because of higher fuel prices, interest rates and grocery prices.

Mr Karmelich also says 10 per cent of families are predicting they will have to miss a bill repayment.

"Australian families are expecting to use their credit not for luxuries, not for holidays, but in fact for their daily essentials," he said.

"So, what we can't read into this is that credit demand is going to go up to fund lavish lifestyles."

"It is really now being used to pay for those essentials and the fact that it is going to be used on credit now, will continue to dampen consumer demand and consumer confidence."

According to the survey the trend is not confined to families, with 24 per cent of younger people (18-35 years old) expected to apply for some form of credit in the next three months.

Mr Karmelich also says older Australians are struggling with rising household debt.

"It actually jumps for people over 50 and that's a concern," he said.

"That's a group of the community which you'd expect to be into their debt retirement stage, almost paying off the mortgage or completely paid off the mortgage.

"But in fact those people are telling us they are expecting to have higher levels of debt."

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Thu 10th July 2008 - 10:40am