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Consumer Debt Reduction


The contemporary attitude that instant gratification is good, combined with the easy availability of credit, makes out-of-control debt inevitable.

According to the Reserve Bank, the consumer debt of New Zealanders at the end of 1999 included

  • Credit cards ($2,403 million),
  • Hire purchase ($2,800 million), and
  • Store cards ($500 million).

Consumer debt can be a big problem, affecting many people. the Shape of Money has put together this programme to assist those who wish to manage their consumer debt, instead of having their debt manage them.

The cost of consumer debt is both financial and emotional.

For example, the total balance outstanding on personal credit cards at January 2005 was $4,002 million (for an update, see statistics from the Reserve Bank). Of that, New Zealanders are being charged interest on $2,815 million. With an interest rate of approximately 18.50% pa, credit companies receive another $520 million each year on top of account fees. That's over $130 for every man, woman and child in the country.

However, the costs of consumer debt are not just financial. The emotional costs attached to consumer debt can also be debilitating. The continuous cycle of debt can add stress and emotional strain to an individual or household.

Identifying a consumer debt problem

Deciding whether someone has a problem with consumer debt is a subjective judgement. The severity of problems ranges from those who incur a credit card charge, knowing they won't be able to pay it off in full, through to those who get a new credit card in order to pay the minimum balance on their existing cards.

If you think you may have a consumer debt problem, see if any of the following apply to you:

  • You have several credit and store cards,
  • You can only manage the minimum payments,
  • Finally paying off a hire purchase account is an opportunity for you to buy something else on credit, or
  • The arrival of the credit and store card bills in the mail causes anxiety.

You're not alone if you suspect that you have a consumer debt problem. If you want to learn to manage that debt and use credit as a financial tool, instead of a burden, we hope the next set of pages may be of some help.