KEY POINTS:
Consumer debt levels are rising and people are putting access to affordable credit at risk, according to debt collection agency Dun & Bradstreet.
John Scott, general manager of Dun & Bradstreet New Zealand, said it was a worry that people were showing signs of debt stress, particularly as
Christmas approached.
The credit reporting and debt collection agency said the vast majority of the debt referred for collection during the September quarter was for low-value amounts.
"Low-value debts are a cause for concern and need to be taken seriously," Scott said.
"Defaulting on a small bill demonstrates that consumers are in very serious trouble or they don't fully understand the consequences of missing payments.
"Not paying a small bill, such as a phone bill, can negatively impact a consumer's ability to access credit for up to five years."
The agency's consumer debt survey for the September quarter showed that the 35-44 age group incurred the highest average debt value at $540, up 15 per cent on the same period last year.
People aged 25 and under showed a 3 per cent decline to an average of $530.
"It's that 35-to-44 group ... they're the ones who are feeling the stress and that ties in with our consumer expectation survey we did earlier in the quarter which highlighted that in that age group up to 36 per cent were expecting to use credit cards to pay for bills they couldn't otherwise afford."
The average debt value was similar for both genders at about $640, with women up 18 per cent and and men up 13 per cent on last year, he said.
"The current economic climate is making it increasingly difficult for consumers to manage their budgets and as we approach Christmas it is even more tempting to spend without thinking about the consequences.
"To avoid an increase in over-indebtedness in the New Year, it is absolutely critical that consumers pay close attention to their finances."
People with any problems should talk to the credit provider immediately, Scott said.
"Those who don't [take action with problems] and perhaps use one credit card or other forms of credit to pay for another bill, you're just getting yourself deeper and deeper into trouble."
Scott expected to see increased debt in the short and medium term.
"I think it'll get worse before it gets better" over the next three to six months, he said. "So I'd imagine if you are going to see any changes or decreases you won't see those probably till about this time next year and can I accurately predict that? No, I can't."
CONSUMER DEBT
September quarter:
* Average debt about $640.
* Consumers aged 35-44 have the most debt.
* Higher average debt in South Island.
