At the end of last year, Australians went on a shopping binge, putting over $20 billion on their plastic and raising the average balance on each card to $3,196, according to figures compiled by the Reserve Bank of Australia.

Now, with the new year underway, with interest rates rising, back-to-school costs due, and costs increasing for utilities, rents, and repayments, more and more of those shoppers are feeling a financial pinch. A survey recently released by credit rating agency Dun & Bradstreet showed that 43% of Australians would have no alternative but to pay for something essential with their credit or charge cards in this first quarter of 2010.

The pinch is worst amongst families with children and young adults, said Dun & Bradstreet CEO Christine Christian.

Fully half of the families with children surveyed said they would charge something essential to their plastic, 8.0% more than the final quarter of 2009. For the young adult crowd between the ages of 18 and 34, the numbers are even higher, with 56% expecting to charge at least some of their bills, up 11%.

According to Ms. Christian, such signs of financial stress could signal more problems down the line. “Further increases in the cost of credit for those groups already under pressure could trigger an irreversible spiral into serious debt troubles,” she said.

Roger Mendelson, CEO of Prushka, said the debt collection agency’s workload had risen 25%, “and that excludes large, one-off referrals.”

He, too, believes that some households are entering “highly dangerous” financial straits.

“Every year, this is the most dangerous time for household debt, but this year I was just really surprised at the increase in overdue accounts referred to us,” he said. “This, to me, is a sign that householders are struggling more than usual and businesses are taking a tougher line on householders carrying debt as they too struggle with cash-flow pressure.”

Source: http://www.news.com.au