Credit can be a useful tool for people to spread the cost of their expenses over time and help manage their cashflow. However, there are some risks to consumers who borrow more than they’re able to afford.
Christmas, the summer holidays, and seasonal sales often lead to a spike in people borrowing to pay for presents, trips away, or to snag a sale bargain.
While these items are tempting, head of financial wellbeing at Good Shepherd New Zealand, Natalie Vincent, urges people to only make purchases they have budgeted to be able to afford.
As reported in RNZ, she said while buying planned purchases on sale was a money-saver, impulse purchases that were out-of-budget came at a cost.
In November this year, 431,000 New Zealanders are behind on their payments across a number of credit services such as loans, mortgages, and utility accounts.
For people who are already having trouble making repayments on their mortgages and other credit accounts, adding another line of credit can lead to bigger financial problems.
If you’re unsure if you’re behind on any credit accounts, you can order a free copy of your personal credit report from Centrix here. It will give you a list of all your credit accounts and your recent payment history, as well as your current credit score.
Your credit score is a number between 0 – 1000 that indicates how likely you are to pay your bills on time. The higher your credit score, the lower the risk and the better chance you have of getting additional loans and other credit accounts approved.
Our advice to consumers this holiday season is:
- Check your personal credit report here to get familiar with the information and ensure everything is correct.
- Where possible you should pay your bills on time, and also make payments towards any defaults you may have. This will help improve your credit score.
- If you are struggling to pay your bills on time, speak to your credit provider sooner rather than later. These businesses have teams to help you in these situations.
- Use some of the free budgeting tools available like www.sorted.org.nz to help you manage your money better.
If you or your customers are experiencing financial difficulties this holiday season, please contact MoneyTalks for financial advice. If you are a victim of financial abuse and would like help or advice please contact GoodShepherd.