Wastell says the risk of getting caught in “cascading” debt has increased with the advent of pay advance, or wage advance apps. These are where you can access your pay ahead of time, with the advance repaid, along with a flat fee or a percentage fee, when you are paid by your employer.

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“If you have multiple debts, using one to pay off the other can be dangerous, especially if you end up taking on more debt by applying for pay advances just to cover what you owe,” Wastell says.

A separate survey by Finder reveals that 45 per cent of respondents say they have savings of $1000 or less. “Even something as trivial as a flat tyre would be too much for many households right now,” says Graham Cooke, head of consumer research at Finder.

“Those lower levels of savings means people are much more likely to have to turn to credit cards, loans and buy-now-pay-later products to get by. While these products can be great if used properly, they can quickly get out of hand if relied on for everyday expenses,” Cooke says.

Credit bureau illion expects credit card and home loan delinquencies to continue to rise in coming months.

There was a large increase in the number of credit card applications a year ago and many of those with new credit cards are falling behind on repayments, the credit bureau says.

• Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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