Rising Arrears Signal Mounting Financial Stress for Kiwi Households

Despite recent cuts to the Official Cash Rate (OCR) by the Reserve Bank, aimed at easing pressure on borrowers, New Zealanders continue to feel the weight of financial strain. New data from the The August Centrix Credit Indicator Report shows more people are slipping into arrears on credit cards, personal loans, and Buy Now Pay Later (BNPL) services, highlighting the challenges of keeping up with repayments in a climate of stubbornly high living costs and economic uncertainty.

The report also reveals that 12.41% of the credit-active population – around 480,000 people – are now behind on repayments, an increase of 1.3% compared to the same time last year. While some indicators suggest stabilisation, the report paints a picture of ongoing stress for Kiwi households.

Consumer Debt Pressures Remain High

The report highlights concerning trends across key lending categories:

• Credit card arrears remain at 3.9%, the lowest since August 2022, though thousands still struggle to pay
• Personal loan arrears stand at 9.1%, unchanged from last year, suggesting borrowers are still under pressure
• Buy Now, Pay Later (BNPL) arrears are at 7.3%, broadly consistent with 2024 levels

Although credit card arrears have edged down, the persistently high arrears across other lending types reflect the reality: many households are stretching their finances just to meet day-to-day commitments.

Hardship on the Rise

Financial hardship cases continue to grow, with nearly 14,270 accounts now reported in hardship nationwide. Of these, 29% relate to credit card debt, while personal loan hardships have risen 13% year-on-year, now making up almost one in five hardship cases. 

Younger New Zealanders are especially vulnerable. Those under 25 face the highest levels of financial stress, a reflection of limited savings buffers and heavier reliance on short-term lending such as Buy Now, Pay Later options.

The Role of Debt Consolidation

Managing multiple debts – each with different interest rates and due dates – can quickly become overwhelming.

“Consolidation isn’t about taking on more debt - it’s about regaining control,” says Corby Price for Eastbay Finance. “By bringing debts together into a single lower repayment, people can reduce stress, improve their cash flow, and work toward becoming debt-free sooner.”

Debt consolidation loans often allow borrowers to reduce their loan repayments, creating clarity and confidence in repayment planning.

A Call for Financial Resilience

Despite recent OCR cuts, Kiwi families continue to carry significant financial stress. With arrears across BNPL, personal loans, and credit cards remaining high, financial resilience has never been more important.

Eastbay Finance encourages borrowers to seek support early and explore strategies like debt consolidation to build stronger financial footing.

“Financial resilience is built step by step,” Corby Price says. “By taking action now, households can put themselves in a stronger position for the months ahead.”