Credit and Financial Services Targeted at Australians at Risk of Financial Hardship
Parliament of Australia
On 17 October 2018, the Senate referred an inquiry into the Credit and financial services targeted at Australians at risk of financial hardship to the Senate Economics References Committee for inquiry and report by 22 February 2019.
Our Submission
To understand this phenomenon better, the Melbourne Microfinance Initiative explored the use of these services by people under the age of 25 years old via 154 surveys and interviews. Key findings relating to the users' most recent purchase include that:
75% bought something that they did not need with their most recent purchase.
54% bought something they wouldn't have bought otherwise with their most recent purchase.
41% have paid at least one late fee, 19.2% due to lack of funds due to low income
60% are spending more money than they were before buy-now pay-later was introduced
10% made repayments by borrowing money (family, friends, cash loan or credit cards)
80% had some form of existing credit (car loans and credit cards the most common)
However, the research also found that these financial services are valued by many consumers for their convenience and ability to smooth consumption, with examples of responsible consumption enabling very low income consumers to access items that improved their health and wellbeing that would otherwise be unattainable.