10 million Aussies to seek financial hardship due to COVID-19
New Mozo research reveals that 54% of Aussies predict they will have to apply for financial hardship with their bank or energy provider over the next six months. That’s over 10 million Australians.
Since the COVID-19 pandemic began, banks have already received a massive 500,000 financial hardship applications, despite 71% of Australians having never applied for such assistance before.
Mozo Director, Kirsty Lamont, explains that these are unprecedented times with the coronavirus curveball causing almost one million Aussies to lose their job since mid-March.
She says that because many people have never applied for hardship before, it's even more crucial now that they know how to navigate the financial aid process.
“Mozo research has found that three out of four Australians are now worried about their job security, with concern tripling since January. With financial worries brewing, 73% are stressed about their debt levels,” Lamont says.
“If bills are mounting and you’re uncertain about your next paycheck, the best thing to do is to get on the phone to your provider and explain your situation. Don’t wait for late fees or overdue bills to hit, be proactive and find out what hardship options could be available to you.”
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According to the numbers, home loan repayments are currently causing the most stress amongst Aussie banking customers with 25% saying they are their primary financial concern.
But it’s not only home owners that are feeling the brunt of COVID-19: 14% of Australians said that they were concerned about being able to make rent over the next six months.
What are Aussies doing in response?
With many Australians facing financially tighter times, some have turned to lines of credit as a quick solution.
Mozo’s research found that a worrying one in five are thinking of applying for a new credit card, while an additional 16% are looking for a larger limit. Similarly, 50% of Buy Now Pay Later customers have started using the payment platform to purchase essential items.
But Lamont warns this may not be a financially savvy option, as it may leave you worse off and cradling more debt than you were before.
“If you’re struggling to make a payment, call your provider and explain your situation - as the vast majority of banks, energy providers and even Buy Now Pay Later platforms have some kind of hardship policy and will work with you to create a payment plan that is sustainable to your situation,” she says.
“Power companies offer a range of hardship programs ranging from extensions to paying in instalments, to centrelink deductions or utility rebate applications while many banks are offering mortgage holidays, fee free redraws on loans, fee waivers and access to financial counselling.”
It’s important to keep in mind that financial assistance packages are different between different banks, lenders and energy providers. So when you reach out to your provider, ensure you find out which financial support you are eligible for.
Want to find out what your options are for your finances during COVID-19? Take a look at Everything you need to know about Coronavirus and your finances.