Despite the biggest surge in consumer confidence in 13 months, nearly half of Australian households worry that rising interest rates will hurt their finances.

The Westpac-Melbourne Institute reading of consumer confidence for July surged 11.1%, from 101.9 to 113.1, the strongest rise since the mid-1970s.

But at the same time, a separate survey of 1205 adults across Australia by credit reporting agency Dun & Bradstreet reports that 49% of households expect rising interest rates to damage their finance, although only 20% expect that to cause higher levels of debt.

The Reserve Bank has raised the overnight cash rate six times since October, including three times this year, and the Dun & Bradstreet survey was in the field in June, one month after the last time, when the cash rate was increased to 4.5%.

The Dun & Bradstreet report states the stress is worse amongst families with dependent children, with 55% of such households claiming higher interest rates would damage their finances. That compares to 43% of households without dependent children.

But despite the worries, only 20% of all households believe the increased financial stress would lead to higher debt levels.

Looking ahead to the September quarter’s expenses, nearly half of households with ages below 50 expect to need credit to pay them, as compared to a quarter of households aged above 50.

Figures recently released by the Reserve Bank show that the average balance on credit cards rose to $3,248 in May, 5% higher than May 2009.

Source: http://www.businessday.com.au/business/half-of-households-worried-over-rates-20100714-10aai.html