Credit card debt has overtaken electricity bills as the number one concern for people speaking to Consumer Action Law Centre's (CALC) debt counsellors in the past year.
For new Wangaratta mum Brooke Haebich, credit card debt is one of many keeping her up at night.
She had been balancing her budget for years when she unexpectedly fell pregnant. Her living costs went up, and the family dropped from two incomes down to one.
Now they are struggling to make ends meet, and owe money on cars, buy now, pay later schemes, rent, electricity and credit cards.
"I was told I couldn't have children, so we took on financial commitments, not thinking one of us would have to stop working," she told ABC Statewide Drive's Nicole Chvastek.
"We know we've got the debt. We know we have to pay it. Our concern is how we do that moving forward."
Ms Haebich said they were struggling to put enough food on the table.
Despite breastfeeding her four-month-old son, Jack, all she had to eat one day this week was a cup of rice and a sandwich.
Ms Haebich and her partner have been using credit cards and the buy now, pay later scheme to try and put food on the table.
"I haven't wanted a credit card but applied for one a few months ago to try and survive," she said.
"It is another debt that's on top of everything else. It doesn't make life easy."
Credit card debt number one issue
Consumer Action Law Centre director of financial counselling Katia Sanderson said in the July to September quarter, they had more than 1,700 inquiries.
"Each time a financial counsellor speaks to someone on the phone they have to record at least one issue, but they can record up to three," she said.
"Thirteen per cent of callers said credit card debt was a problem, that makes it the top-ranked issue."
The cost of housing was the second-ranked issue, followed by utility bills.
Ms Sanderson said that even though it was not talked about as much as scams, electricity, petrol prices, and housing costs, credit card debt remained a major concern for people in financial difficulty.
"It's not getting the same attention, but it is causing the same distress for people," she said.
"People tend to carry their credit card debt for a long time, so as the cost of living goes up, the portion of your income that you can use to pay down credit card debt becomes less and less."
Overall credit card debt dropping
Data from the Reserve Bank of Australia shows that Australian households started paying down their credit-card debts during the pandemic. RateCity found household credit card debt is at its lowest level since March 2003.
Of the people who do have credit cards, more than half do not pay any interest, a 2021 RateCity survey said.
However, others are paying interest on tens of thousands of dollars.
With the cost of living on the rise, Ms Sanderson expects more and more people will turn to credit to pay for essential expenses like food, bills and housing.
If credit card debt is allowed to mount, she said it caused more problems than it solved.
"If at the end of the fortnight you don't have the money to put food on the table," Ms Sanderson said.
"We see people turning to fairly problematic products to meet their household expenses — like buy now pay later and payday loans.
"That sends people into a genuine debt spiral because rather than getting ahead, they are falling further and further behind, accruing more debt with less income."
Consumer Action Law Centre is calling for responsible lending, and the regulation of buy now, pay later products.
How debt spirals
Katie knows firsthand how cost-of-living pressures can lead to a mountain of credit card debt.
The regional Victorian mother of two first found herself unable to keep up with repayments after a relationship broke down a few years ago.
"I left with nothing and had to start again," she said.
"Credit cards are the gateway drug."
Without her partner's income, Katie found her part-time and casual work did not always cover her and her children's living expenses.
She was using credit cards to pay for essentials like school uniforms, food, petrol, rent and medical bills.
At one point, she owed $26,000 — approximately $10,000 of which was credit card debt.
"The debt was just mounting and mounting," she said.
Then, when she needed to move into a new rental, she did not have enough money to pay for removalists, bond and rent in advance.
Now the banks would not give her a credit card, so she felt she had no choice but to turn to payday lenders, with interest rates as high as 48 per cent.
"The money is in your bank within the hour. Then you get invitations to top it up," she said.
"Then you are back in the same swamp — I was looking at bankruptcy."
When her debts became unmanageable in April, she called the National Debt Helpline.
They put her in touch with debt relief charity Way Forward. They negotiated with Katie's creditors to freeze the interest and fees so she could start paying down what she owed.
Katie said the call was life-changing.
"The sense of dread every fortnight thinking, 'How am I going to find enough to pay for everything?' is gone," she said.
"It's still not easy, but it's manageable."
Help is available
Ms Sanderson said there were options for those with credit card debt.
"If making repayments is hard, they should speak to their bank about a hardship arrangement, such as pausing or reducing repayments," she said.
"Another option is closing their credit card accounts altogether and organising a payment plan with their bank. However, this may affect their credit rating for a few years.
"If people have no reasonable prospect of repaying a credit card debt because of their age, sickness or disability, banks might agree to a waiver in part or in whole."
