In debt? You are not alone. But with fears of interest rates on the rise, you need to be careful.
Compare the Market monitors credit card and Buy Now Pay Later use through its Household Budget Barometer survey.
According to the latest survey, Gen Xers are the most likely to carry credit card debt (31 per cent), while Millennials are the most likely to use Buy Now Pay Later schemes (40 per cent).
In 2025, 50 per cent of respondents said they had some credit card debt – up 9 per cent on the previous year. Meanwhile, just over a quarter of people (26 per cent) surveyed said they used Buy Now Pay Later services in 2025, compared to 18 per cent in 2024.
Caution ahead
With rising interest rates, we should always think twice before taking on debt.
Things like credit cards and personal loans create a bit of an illusion that we can afford things that we really can’t, and that can get some people into a lot of trouble.
New cars, weddings and even holidays are expensive, and if you’re going into debt to pay for them, be ready to pay a lot of interest as well as fees if you don’t make payments on time.
If you’re thinking about putting big purchases on a credit card or taking out a personal loan this year, make sure you’ve got a solid plan to pay it off quickly. Plug the numbers into a credit card calculator and see what the debt will really cost—you might think twice.
Some people might assume that drawing equity from their home loan is a safer option, but you’re still turning a short-term asset into long-term debt and taking on risk if you can’t meet your repayments. You’ll also have less equity to draw on for future needs like emergencies (they happen to the best of us) and, of course, your retirement.
Prioritising long-term financial peace over short-term pleasure is ultimately a mindset shift. Before taking on more debt, please pause and ask whether it supports your long-term financial goals. If it doesn’t, walk away.
Life on credit
But it’s not just luxuries. I feel for those who go into debt just to pay for essentials like groceries. The cost of living crisis is extremely stressful for some. So if you are under financial strain, please know that help is out there. Insurers, energy retailers and banks all offer hardship programs and support, and you can get free advice from the National Debt Helpline, which offers a confidential service.
Consumer debt is a harsh reality for many people, but with rising rates on the horizon, it’s time to think about it seriously. If you are in the red, clearing your debt, or at least getting it under control, is the smartest financial move you can make right now.
