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One In Four Kiwis Will Pay Their Bill Late In The Year Ahead

Contributor:
Fuseworks Media
Fuseworks Media
One In Four Kiwis Will Pay Their Bill Late In The Year Ahead

One in four New Zealanders have revealed they will pay bills late over the next 12 months, with a staggering 20 percent indicating they may even skip a mortgage repayment. These findings come from Dun & Bradstreet's latest Consumer Payment Priorities Study, which reveals that many New Zealanders are unaware of the ramifications of paying their bills late.

The study reveals that Kiwis aged 35 to 49 are most likely to pay late in the next 12 months, with three in ten (34 percent) admitting they will pay late; this compares to 17 percent of Kiwis aged 50-64. The research also indicates the payment priorities of New Zealanders, with 35 percent stating that if they were short on cash they would miss their pay TV bill. Mobile phone bills followed at 27 percent and 20 percent indicated they would skip their mortgage repayment.

Low (24 percent) and high income households (23 percent) are more likely to miss their mortgage payments than middle income (19 percent) earners. Out of the 20 percent who indicated they would be delinquent with mortgage repayments, 21 percent were women and older people, and 23 percent were high income households.

Many New Zealanders are unaware that late payments can be listed on their credit report, consequently damaging their credit profile. New Zealand's credit reporting laws allow payments to be listed if they are 30 days overdue. Six out of ten, or 62 percent, of Kiwis said they would be more likely to pay their bills on time if they knew their behaviors would negatively affect their credit profile. The study highlights a significant gap in consumer knowledge about the importance of personal finance management, such as paying bills on time.

According to Dun & Bradstreet New Zealand's General Manager John Scott, an individual's payment history is a key determining factor in their credit profile and their ability to access affordable mainstream funds.

"Credit providers rely heavily on a person's credit history when deciding whether or not to grant credit. Therefore payment punctuality is vital and a person's credit rating is akin to a lenders crystal ball." said Mr. Scott.

"A person's credit history is used to assess whether or not a potential customer is likely to pay their bills and whether or not they will pay on time. Mortgage lenders, banks, utility companies, telco's and various other lenders all follow the same formula, evaluating an individual's credit history to gauge their financial personality. So it is important to have a good bill-paying record," he advised.

"Factors such as defaults, filing for bankruptcy and court actions are all examined to determine what kind of a customer the individual has been and more importantly what kind of a customer the individual will be. The calibrated information determines whether or not lenders will do business or lock hands in a contract with individuals."

The study also shows the percentage of New Zealanders who have been delinquent in paying bills over the last 12 months. Twenty one percent of Kiwis settled their credit card accounts late and 20 percent paid their home phone bill late. Meanwhile 19 percent were late in paying their mobile phone, pay TV and internet bills. Younger people between the ages of 18-34 were common culprits of late internet and home phone bills, while middle aged Kiwis (35-49 years) paid their mobile phone and home phone bill late. For older Kiwis (50-64 years), credit card bills or council rates were the most common problem accounts. According to the research, council rates amounted to the most significant portion of bills paid delinquently in the last 12 months, with 42 percent of New Zealanders paying it 30 days+ past its due date. The credit card follows closely with three in 10 Kiwis paying the account at 30+ days past due, this is trailed by 27 percent paying the pay TV account past 30 days. The primary reason cited for late payments was that individuals did not have enough money - 47 percent of Kiwis stated this reason for not paying promptly, while 31 percent said they simply forgot to pay.

Among the New Zealanders who were tardy payers in the previous 12 months, those aged 35-49 (52 percent) were more likely to cite lack money as the primary reason compared to those aged 50-64 (37 percent). Low income earners (60 percent) also accounted for the majority of late payers who said they had no money - this compares to higher income households (30 percent).

A lenders aversion to risk should not be underestimated; examining an individual's credit profile is their way of managing probable risk. An individual's credit history is a significant determining factor of whether or not a lender will lose money by engaging in contract with a person, therefore it is important for individuals to manage their credit commitments. "A late payment, or worse, recurring late payments, have disapproving effects on an individual's credit history and can cause long term damage that takes years to amend. It is important for individuals to pay bills in a timely fashion and be vigilant of their contractual obligations."

"For credit providers the research offers an important message - companies should be cautious and do their homework before extending funds. Businesses must also be ready to promptly chase overdue accounts, especially when consumers have indicated they will be defaulting on some bills. In the current economic climate, when markets are still recovering, it is important for businesses to maintain a strong cash position whilst mitigating their risk."

This study was conducted online by Taylor Nelson Sofres in May 2010 among n=1,000 adults aged 18-64 nationally.

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