Many Kiwis using credit in 'ways that may eventually harm them' says Dun & Bradstreet

Many Kiwis using credit in 'ways that may eventually harm them' says Dun & Bradstreet

Credit reporting agency Dun & Bradstreet says with household debt levels mired at historic highs, many people are struggling to balance their income and credit commitments, meaning many New Zealanders are using credit in ways that could eventually harm them.

Against this backdrop, Dun & Bradstreet's New Zealand general manager John Scott says future interest rate rises could be "the trigger that causes distress for many households."

Scott's comments come as Dun & Bradstreet releases its latest Consumer Credit Expectations Survey.

According to the survey, nearly one in three Kiwis believe they will experience some difficulty meeting credit commitments during the next three months. And whilst 34% of people surveyed nationwide expect to use their credit card to pay for otherwise unaffordable expenses, the number rises to 56% in earthquake hit Christchurch.

Meanwhile, 27% of people intend to apply for new credit during the June 2011 quarter.

"Overall the survey indicates that while Kiwis have a reasonably strong appetite for credit they are concerned about their capacity to effectively manage debt levels," says Scott. "Expectations of relying on credit cards for otherwise unaffordable expenses and worries about meeting future credit commitments are the strongest indication of this concern."

Scott says the latest data points to the financial pressure many households are experiencing as a result of debt levels remaining at historic highs of about 150% (as a percentage of households' disposable income), despite much talk of household deleveraging.

“Household de-leveraging has been a regular theme in economic commentary over recent months. However, debt levels remain at historic highs and many households continue to struggle balancing their income and credit commitments’, Scott says.

“This survey shows that many Kiwis are using credit in ways that may eventually harm them and future interest rate rises later in the year may be the trigger that causes distress for many households.”

The survey also shows 28% of people anticipate difficulties in meeting their credit commitments, and 43% believe a rise in interest rates will have a negative impact on their finances.

Scott says the solution to potential credit stress involves action by the government, lenders and borrowers.

“Lenders need to ensure they are conducting rigorous credit checks that examine a borrower’s total credit exposure. Government can help in this regard by pushing ahead with its plan to introduce comprehensive credit reporting. This reform will ensure lenders have better information on which to base lending decisions”, says Scott.

He notes that consumers too need to be part of the solution.

"They need to think carefully about the credit they are seeking and how they are going to use that credit," says Scott. "Any decision to apply for new credit or increase their credit card limit should begin with obtaining a copy of their personal credit report so they understand their current credit position.”

Scott told interest.co.nz in a Double Shot interview in February that changes being introduced by the Privacy Commission, that see New Zealand moving to a more intrusive credit reporting regime where more information is made available about people, will reduce the number of bankruptcies and credit defaults.

Dun & Bradstreet's survey was conducted by Taylor Nelson Sofres in March, examining peoples’ expectations for credit applications, credit usage, and spending and debt performance in the June 2011 quarter. It was conducted online with 1,000 adults aged between 18 and 64 surveyed.

 

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30 Comments

That's fine. That 1/3 of stressed Kiwis won't be property owners, and so won't need to sell to reduce their debts. They will be fine, and keep renting out their investments to....the third that are running into trouble!

the problem is we have lent our investments to those people who are not going to be able to pay us back.

Eventually we are all stuffed.

The mentality of the bottom 1/3 is a worry.  They don't think they need to apply themselves at school, and that those who do are considered 'mugs or nerds'. Quite an eye opener if you go to talk to a class at high school, go into the top stream and they are courteous and attentive, go into a lower stream and the life skills many exhibit are shocking. I'd say many of the public have little appreciation what teachers have to handle. So they are reluctant to learn much if it involves effort, and have little skills to offer the modern society.  Yet they have a strong sense of entitlement that they are as good as the next person (doesn't matter even if he is a person who has studied long and hard and become an engineer or the like), so they live on welfare and credit as much as they can get away with.  Any concept of putting in the hard yards or delayed gratification is as foreign as asking them to learn a foreign language  And yes this is a generalisation but alas one that has to many who fit the description. C'est la vie! We might be stuffed unless our bottom performing sector has a change of mind, but don't hold your breath - OECD testing of students show our top 20% to be one of the highest in the world, and our bottom 20% to be one of the lowest, and  the gap in society is inevitably  going to widen

Kinda hoping the bottom 20% would hop over the ditch for mining work.....then we should cancel their passports....

regards

Steven who would do the work some of the bottom 20% do if they left for Aussie. You and I wouldn't.  We actually need to pay the rest home care givers and others like them wages that they can live off and maybe they would not need to use their cards to survive.

I think you will find a fair chunk of the bottom 20% dont work....and therein lies the problem.

KTF would you wipe someone's bum while working in a rest home for less than $14 an hour?

That is what we expect the bottom 20% to do.It is no wonder some of them get on the dole or get over to australia for decent wages.

The problem is that the sort of people that do that, would do it even if it was unpaid. I think you are talking about the next 20% though, not the bottom 20.

Don't worry though the bottom 20% will be stupid enough to be used as cannon fodder when the call comes.

I think it is sad though that we here are all to focussed on money, when there are elements to our society that have a more service orientated personality. They actually need looking after rather than denigrating. Afterall we all need a nurse, teacher or policeman at some stage of our lives.

It is called abuse of good will.

EA I do it every day...for free...its called having kids.

My point was (in response to a previous post) that there are a proportion of the bottom 20% who are an absolute waste of space and contribute nothing to society.

20 + years of social engineering have led to an entrenched entitlement mentality and intergenerational welfare dependency. There are those who choose to suck off the state tit as a lifestyle choice....and everybody who pays tax in NZ effectively subsidises them. It gets under my skin that nothing seems to be done about them.

(Note im not having a pop at beneficiaries in general...just those who think there is a free lunch).

Not so much social engineering, also consider how significantly the labour market has changed in the last 30 years.  We no longer make goods here that utilisies mostly semi-skilled ppl, that sort of work (eg making shoes) we export to china etc....

Waste of space, from what I can read some of the top 1% the same can be said, in fact if inside job is any indication they are actually damaging...

"intergenerational welfare dependency"........yes I have to agree there is some % where this is the case.....the solution however has not yet been found...or maybe no one is willing to pay it....(maybe higher minimum wage etc)

Ive also seen comments that some middle class mothers are miffed they have to go out to work once their kids are too old for them to continue to get WFF...so its obvious that for some in all walks of life "sucking on the state tit" is seen as the easy option and one they'll take'.

"free lunch" takers, indeed....

regards

Yes....my excuse is Im full of flu so thinking poorly!  Sort of....there is it seems always lots of un-skilled and semi-skilled and this group always has the highest un-employment %....so actually I was kind of thinking less of them was good....but actually the ones prepared to move are probably the better ones.........

:/

regards

Thst's how Socialism works.  However the finale comes when the Gov't runs out of other people's money, which will eventually happen.

Haha good one. Not that I like any sort of politics, but that is funny.

Just an observation about 2 visits to rest homes recently.

Visited an elderly relative in Mission Bay and the carers were largely Pacific Islander; visited an elderly family friend in Mt Maunganui and carers were mainly Filipino.

Guess the unskilled Kiwi manages to avoid such jobs.

 

 

Where I live in one of the provinces where there has not been so much immigration such jobs are filled by new zealanders of all types and ages,usually people who have not had a post school education of course as the wages are terrible. I take my hat off to them.

sorry what was that?

Where I live in one of the provinces where there has not been so much immigration such jobs are filled by new zealanders of all types and ages,usually people who have not had a post school education of course as the wages are terrible. I take my hat off to them.

You will have to speak up, I can't quite hear you.

Where I live in one of the provinces where there has not been so much immigration such jobs are filled by new zealanders of all types and ages,usually people who have not had a post school education of course as the wages are terrible. I take my hat off to them.

a little louder....

Where I live in one of the provinces where there has not been so much immigration such jobs are filled by new zealanders of all types and ages,usually people who have not had a post school education of course as the wages are terrible. I take my hat off to them.

...eat whos hat?

Where I live in one of the provinces where there has not been so much immigration such jobs are filled by new zealanders of all types and ages,usually people who have not had a post school education of course as the wages are terrible. I take my hat off to them.

 cheers to you too.

Where I live in one of the provinces where there has not been so much immigration such jobs are filled by new zealanders of all types and ages,usually people who have not had a post school education of course as the wages are terrible. I take my hat off to them.

You can say that again....you can say that again....you can.......

ex Agent, there could be some Filipinos coming your way soon

Better Filipinos than lazy as kiwis...

Man... is life really that complicated?! Who needs credit to live?!

All duped to think credit is real money, real wealth. It's a load of crap.

The answer is too easy and simple for most to understand let alone do. Spineless, selfish whimsical babies all in a constant state of crying for more 'tittie' time on the banks breast!

NZ get's what it deserves... mindless dim wits more than happy to go with the flow. Wealthy are more than clever enough to understand how to swindle the system before it swindles them.... hahaha nothings changed, will it ever?

The whole system is broke... the best bet is to bet against the system.

1. Credit is crap so use it to leverage yourself to greater 'wealth'

2. Avoid paying as much tax as possible. I have never witnessed a Government policy that has 100% fullfilled it's intended purpose.

3. Use your wealth to help someone else in need.

Damn that's just too simple aye.

Gold is up.