Almost half of Australians are starting the year in debt, with many unable to manage a household budget and relying on buy now, pay later schemes to purchase basics.
New research from The Salvation Army found 46 percent of all Australians were starting 2025 in debt, with more than 3.2 million people (15 percent) not understanding how interest worked and almost one in three (30 percent) unable to create a budget for themselves.
Head of The Salvation Army’s Moneycare program Kristen Hartnett said the data came on the back of an expensive holiday period for many, where over 34 percent used credit cards and 17 percent used buy now, pay later schemes to pay for Christmas.
Ms Hartnett said 6.3 percent borrowed money and 8.9 percent sold personal belongings so they could afford Christmas in 2024.
“Our research shows that people are really struggling, with the increased cost of living adding extreme pressure on individuals and families across the country, and many find themselves in crippling debt or financial distress,” she said.
“We have noticed a worrying trend in the past year. Buy now, pay later products have overtaken credit cards as the most common form of debt amongst our community members.”
Ms Hartnett said many were using these schemes to make ends meet, paying for items such as groceries and pharmaceutical items using these methods.
“This is particularly concerning, as many Australians do not view buy now, pay later products as a form of debt, when in reality it can lead to a rapid and crippling cycle of debt as a result of fees.”
She said the start of the year was the perfect time to take a fresh look at your finances and plan for the year ahead, with the Salvos’ Moneycare service a free and confidential financial counselling service.
“In the last financial year, Moneycare provided 52,000 sessions of care to those struggling with their finances, and 27 percent of those who reached out to Moneycare were employed.”
Ms Hartnett said Moneycare had free online tools and resources, as well as financial counsellors who were experts at getting people back on track.
“You can also speak to a free Moneycare financial counsellor anonymously via live chat.”
Visit The Salvation Army’s Moneycare website or phone 1800 722 363.
