Australian household debt is among the highest in the world relative to income. According to ABS, average household credit card debt is AUD 4,000+, with mainstream APRs of 19-25%. BNPL (Afterpay, Zip) has accelerated consumer debt normalisation.
ASIC monitors over-indebtedness with the Debt Service Ratio (DSR).
What is DSR?
DSR = (Total monthly debt payments) ÷ (Monthly net income).
Includes mortgage/rent, personal loans, credit card minimums, BNPL, HECS-HELP repayments, car finance.
The 3 thresholds
| Zone | DSR | Diagnosis |
|---|---|---|
| 🟢 Healthy | 0-30% | OK |
| 🟡 Caution | 30-45% | Stress |
| 🔴 Over-indebted | 45%+ | Urgent action |
The 3 strategies
1. 0% balance transfer card
Australian banks offer 12-26 months at 0% intro APR. Transfer fees 1-3%.
2. Personal loan consolidation
SocietyOne, Plenti, NAB, Westpac offer 6-15% APR fixed.
3. Avalanche vs Snowball
Standard methodologies apply.
When to consider Part IX or bankruptcy
Part IX Debt Agreement
Formal agreement administered by AFSA (Australian Financial Security Authority). Stays on credit file 5 years.
Part X Personal Insolvency Agreement
Similar to IVA. For higher-debt, higher-asset situations.
Bankruptcy
Discharges most debts. 3-year duration. Stays 7 years on credit file.
Free resources
- National Debt Helpline (1800 007 007): free counselling
- Financial Counselling Australia (financialcounsellingaustralia.org.au)
- AFSA (afsa.gov.au): insolvency info
- MoneySmart: ASIC guidance
Based on ASIC + ABS Household Debt data.
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About the author
Enrique 'Kike' Faúndez is an Information Systems and Management Control Engineer from Universidad de Chile, with master’s degrees in Finance from Universidad de Chile and Industrial Engineering from Pontificia Universidad Católica de Chile. He has 15+ years of experience in regulated financial services across finance, operations, and digital product development. He founded CashControlly in Santiago, Chile, with the conviction that personal financial control should not be a privilege, but an accessible and well-designed tool.
- Master's in Finance, Universidad de Chile
- Master's in Industrial Engineering, Pontificia Universidad Católica de Chile
- Information Systems and Management Control Engineer, Universidad de Chile
- AI and ITIL certifications
- 15+ years in regulated financial services
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