Travellers urged to beware “debt-lag”

Travellers urged to beware “debt-lag”
By Anne Majumdar


Australian travellers are being warned to be extra cautious when spending overseas, as a new survey showed many are returning with credit card debts they are unable to immediately repay resulting in spiralling interest fees.

Last year, more than 2 million Australians returned from overseas trips with credit card debt they can’t afford to pay off immediately, according to the new “Debt-lag” survey conducted by comparison site creditcardfinder.com.au.  That meant an estimated total of $139 million in interest.

The survey showed that one in three Aussies that used their credit card while travelling failed to pay off the balance in time to avoid paying interest.

Half of travellers paid off their credit card debt accumulated while on holiday within the first three months, but around one in five took between three and six months, paying an average $117 in interest.

Around 10,300 Aussies took a year to pay it off, working up an interest bill of $811.

Consumer advocate at creditcardfinder.com.au Bessie Hassan strongly advised Aussies to monitor their spending while on holiday.

“Australians spend an average of about $2,000 on their credit cards while on holiday and this can easily get blown out of control if you don’t pay it back when returning home,” she said.

She highlighted the tiny 2% of travellers that said they would never pay off their holiday credit card debt.

“The average amount of debt accrued for this group was $1,589, which would take almost 14 years to repay by making minimum repayments and cost over $2,000 in interest charges.”

The number of travellers that would take more than 12 months to pay off their credit card debt climbed 17% on the 2013 survey to 211,000 Aussies.

“With many lenders increasing home loan interest rates right now and credit card rates expected to follow next year, it’s going to be a tougher year ahead for many Australian families. Adding ‘Debt-lag’ to the mix will be unnecessary added financial stress,” Hassan cautioned.

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