NAB is warning against the dangers of payday loans, as more Aussies turn to the 'quick fix' lending to deal with rising cost of living.
New NAB research out today reveals one in 10 Australians facing financial hardship have accessed a payday loan in the past three months.
Payday loans were the third most common type of debt used to manage financial hardship in Q3, behind credit cards and borrowing from friends and family (used by one in three people).
In the lead up to Christmas, NAB Head of Customer Vulnerability, Mike Chambers warned against the use of payday loans to manage the extra expenses people may be facing.
"Christmas can be a financially stressful time for many people and when faced with financial stress it can be tempting to try and find a quick fix to manage costs," Mr Chambers said.
"Payday loans can seem an attractive option, as they are often instant and have low credit controls in place, making them more accessible to people in desperate situations.
"What people don't realise is there are often many hidden costs associated with the loans, on top of higher interest and late payment fees."
According to NAB Q3 insights, payday loans are the most stress-inducing of all debt for Australians (scoring 64.2pts), ahead of loans from family and friends (57.3 pts), personal loans (51.9 pts) and home loans (51.7 pts). On average, Australians owed $6,200 on payday loans in the last three months.
Mr Chambers said a no interest loan, through organisations like Good Shepherd, was a more sustainable option for people who need to finance things like emergency essentials, cars or whitegoods.
NAB provides the capital for Good Shepherd's no interest loans and has supported more than 68,000 Australians on low incomes with $47 million of loans in the past 12 months.
