Only one in ten to improve payment behavior despite new laws

Wednesday, 4 April 2012


Only one in ten New Zealanders to improve payment behavior despite new laws

Only 14 percent of New Zealanders expect to improve their payment behaviors following the recent introduction of new laws, which allow credit providers to record whether people are paying their financial commitments on time.

Dun & Bradstreet’s latest Consumer Credit Expectations Survey, which examines expectations for the June quarter 2012, reveals that men are less likely than women to change their behaviors, with just nine percent indicating they will improve payment times. This compares to 18 percent for females.

The research also reveals that older people are less likely to speed up their payments, with only one percent of those aged 65+ indicating they will improve payment times, while 19 percent of 18-34 year olds will pay their bills more promptly.

According to John Scott, General Manager of Dun & Bradstreet New Zealand, the significant reforms that came into play on 1 April mean it is now more important than ever before for individuals to monitor and track their repayment patterns and credit history.

“Banks, telecommunications companies, utilities and other credit providers are now able to record whether people are paying their bills and other financial commitments on time,” said Mr Scott.

“This has significant potential to benefit those that pay their credit obligations on or before the due date. However, it also allows credit providers to see which customers have a history of paying delinquently. Consequently, it’s more important than ever for individuals to pay attention to all of their credit obligations and to ensure they keep a close eye on their credit record.”

The D&B survey also reveals that some New Zealand households continue to face financial pressures. Thirty four percent of households will need to use their credit card for a purchase they couldn’t otherwise afford during the June quarter. In addition, 29 percent indicate they will have difficulty meeting their credit obligations and 18 percent expect their level of debt to increase. This equates to increases of four and two percent respectively over the past six months.

The likelihood of an interest rate rise during the June quarter is relatively low as inflation remains within the Reserve Bank’s target range. However, if an upward movement were to occur, the finances of 45 percent of New Zealand households would be negatively impacted. This figure is up two percent on the same quarter last year.

“Difficulty meeting credit obligations, increased debt levels and a need to turn to credit for otherwise unaffordable expenses are often early warning signs of financial distress, or the start of a continuing debt spiral,” said Mr Scott.

“With new credit reporting laws now in play, these signs will become increasingly apparent, allowing credit providers to better understand the ability and propensity of consumers to repay their credit obligations.”

While some consumers continue to face financial pressures, others are tightly managing their finances by avoiding spending and new credit applications. Consequently, the slow economic recovery looks set to continue.

Seventy three percent of households have no intention of making a major purchase during the June quarter – a trend which has been evident for the past two years. In addition, just six percent of New Zealanders intend to apply for a new credit card and only eight percent expect to apply for a mobile phone contract.

“It is clear that many households continue to keep a tight rein on spending and new credit applications,” said Mr Scott.

“While this belt tightening may be a necessary move, it is continuing to impact businesses, particularly in the retail and service sectors. While the domestic economy is showing signs of recovery, an extended continuation of this trend will likely result in a prolonged period of depressed growth.”

Consumers can obtain a copy of their personal credit report at www.dnbcreditreport.co.nz.

Note: The national survey was conducted online by TNS Global between 12-19 March, surveying 1,000 respondents aged 18+ years.

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