Financial hardship and a lack of borrowing options are driving many Australians into the arms of payday lenders, but experts are warning this can mark the beginning of an endless cycle of debt.
Debt Rescue operations manager Rachael Witten said that for those finding it hard making ends meet, the sparse borrowing options available to them compounds the problem.
"What we're looking at is the fact that even people who are living on Centrelink are finding that the basic cost of living continues to rise, while their income is not," she said.
"So, then, what they're relying on is payday loans and the like, just to meet living costs.
"And, aside from the odd lump sum payment here and there, they're not keeping up, their income is not changing."
Ms Witten said that a once-yearly advance payment from Centrelink – of between $250 and $500 for the unemployed and students – was often not enough to cover the rise in living expenses.
"People on lower incomes are exceptional budgeters. But, many of the basic costs of living from day to day are increasing far beyond the craftiest money manager," she said.
The Caught Short report, released jointly by National Australia Bank, RMIT University, the University of Queensland, the Queensland University of Technology and Good Shepherd last month, showed that the majority of payday loan customers were on Centrelink benefits, and that many felt trapped by a continual cycle of borrowing and repayment.
Debt Rescue operations manager Rachael Witten said that for those finding it hard making ends meet, the sparse borrowing options available to them compounds the problem.
"What we're looking at is the fact that even people who are living on Centrelink are finding that the basic cost of living continues to rise, while their income is not," she said.
"So, then, what they're relying on is payday loans and the like, just to meet living costs.
"And, aside from the odd lump sum payment here and there, they're not keeping up, their income is not changing."
Ms Witten said that a once-yearly advance payment from Centrelink – of between $250 and $500 for the unemployed and students – was often not enough to cover the rise in living expenses.
"People on lower incomes are exceptional budgeters. But, many of the basic costs of living from day to day are increasing far beyond the craftiest money manager," she said.
The Caught Short report, released jointly by National Australia Bank, RMIT University, the University of Queensland, the Queensland University of Technology and Good Shepherd last month, showed that the majority of payday loan customers were on Centrelink benefits, and that many felt trapped by a continual cycle of borrowing and repayment.
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