The big bank has warned consumers about the potential risks of payday loans as Australians prepare for the festive season.
A new NAB study has found that one in 10 Australians who have experienced financial difficulty have accessed a payday loan in the past three months, making payday debt the third most common type of debt. more common in the third quarter behind credit cards and borrowing from family and friends. .
Australians owed an average of $6,200 in payday loans over the past three months, according to third-quarter information from the big bank, and proved to be the most stressful of all debts, scoring 64.2 points, followed loans from friends and family (57.3 points), personal loans (51.9 points) and home loans (51.7 points).
NAB’s Customer Vulnerability Manager, Mike Chambers, has warned against using payday loans to deal with the rising cost of living over the holiday season.
“Christmas can be a financially stressful time for many people and when faced with financial stress, it can be tempting to try and find a quick fix to manage costs.said Mr. Chambers.
“Payday loans can seem like an attractive option because they’re often instant and have low credit checks in place, making them more accessible to people in dire straits.”
Mr. Chambers added that there are often many hidden costs associated with payday loans in addition to higher interest and late payment fees.
He added that customers beleaguered by payday loan debt should contact their bank for help.
“A call to your bank is the best first step to discuss the possibility of a loan payment break, a reduced payment plan, or access to an independent financial adviser,” Chambers said.
Chambers further recommended organizations such as Good Shepherdwhich offer interest-free loans, as a more suitable option for people in need of basic necessities, cars or appliances.
The big bank has partnered with Good Shepherd, an organization dedicated to helping young women and families in need.
Reportedly, more than 40,000 low-income Australians have received interest-free loans since January 2022, with the major bank saying a “record” $27 million has been given to Australians.
The goal of the partnership was to help low-income people buy basics such as appliances, pay medical bills, and buy cars or computers, with customers only having to repay the loan in small regular installments.