Westpac’s survey of more than 1,000 customers revealed that 28% expect their holiday spending to probably or definitely trigger financial stress in the new year.
Nearly 20% of respondents planned to rely on debt to cover their holiday costs, while just under three-quarters expressed very or moderately high concern about the cost of living.
“While we have seen a reduction in interest rates over the last year, it’s clear that people and our customers still feel very much that the cost of living and the pressure of finances is present still,” Westpac managing director of product sustainability and marketing Sarah Hearn said.
According to Hearn, the number of people seeking debt consolidation loans has risen, along with the amounts they are requesting.
“At this time of the year, though, we would tend to see in the coming months more debt consolidation going on as people look to kind of get their finances in order and simplify the debt that they may have into one.”
Nearly a quarter of respondents said their extra January and February costs, like annual bills and back-to-school expenses for kids, added financial pressure.
“A really high portion of people said that they’d be expecting more financial pressure at this time of the year.”
“One in four people pointed out that it’s the annual bills that would be coming through, life insurance and paying off summer holidays, but it’s also the additional expenses like children going back to school and paying off the summer holiday,” Hearn said.
“So some of those incidental expenses that you typically see more in January, school uniforms, books, laptops, all those sorts of things, there’s a real spike. So that puts additional pressure on top of what is already a cost of living pressure that people are feeling.”
Hearn noted that people were often consolidating buy-now-pay-later debt alongside credit card and personal loans. If debt consolidation wasn’t enough to resolve the issue, she advised speaking with banks to explore available options.