New research reveals that 40% of surveyed Australians have become more reliant on credit cards to cover basic expenses like groceries between wages over the past 12 months.

According to the research from Money.com.au, a further 31% only turn to credit cards when unexpected expenses arise, while just 39% say they never need credit to bridge the gap between paydays.

Money.com.au Head of Insights Sean Callery says more Australians financing everyday essentials on credit is a warning sign for discretionary retail.

“If people are relying on credit to cover essentials like groceries and fuel, discretionary retail is typically the first place that pressure shows up,” he says.  

“Once a shopper’s credit capacity is being absorbed by everyday costs, there’s less room left for anything beyond the essentials – and that has real implications for retailers relying on discretionary spending to drive growth over the next 12 months.”

Mr Callery notes that it’s younger Australians driving the sharpest rise in credit reliance, acknowledging that they’re also core spending demographics for a lot of retail categories.

“Retailers courting younger shoppers should be paying attention to the fact that a growing share of that spending power is coming from credit, not income, which affects both how much they can spend and how sustainably they can keep spending it,” he says.  

The research finds more than half of the Millennials surveyed (54%) say they’ve become more reliant on credit cards to cover basic expenses between pay cheques over the past 12 months, followed by 46% of Gen Z.

By comparison, only 39% of Gen X and 30% of Baby Boomers respondents said the same.

Gen X are, however, the most likely to regularly rely on credit cards to bridge the gap between pay cheques. Nearly one in three Gen X respondents (32%) say they use a credit card to cover everyday expenses for at least six months of the year, compared to 30% of Millennials and Gen Z, and 28% of Baby Boomers.