Australians cut spending & lean on credit as costs bite

Experian has published research showing only one in three Australians feel optimistic about their household finances, pointing to broad changes in spending and borrowing behaviour.

Its Spend Index found 77% of Australians had changed their financial behaviour because of concerns about the economy, while 72% said their household savings had fallen. Another 66% reported financial stress as pressure on household budgets persisted.

Households are cutting back most sharply on discretionary spending. Eating out saw the biggest reduction, with 72% of respondents saying they had pulled back, followed by takeaways at 61%, shopping and retail purchases at 57%, and domestic travel and holidays at 39%.

The research suggests the squeeze is no longer limited to optional purchases. More than half of respondents, 52%, said they had dipped into savings to manage rising expenses, while 42% had delayed major purchases to stay on top of household costs.

Groceries emerged as the biggest source of pressure, with 34% of those surveyed naming them as the expense that had risen the most over the past year. Housing, transport and utilities were the next most commonly cited areas of strain.

Credit use

Experian's data also indicated growing reliance on credit as households tried to manage tighter cash flow. More than one-third of Australians, 36%, said they had relied on credit to cover everyday or essential expenses, while 37% had used one form of credit to manage or repay another.

At the same time, 41% of Australians were struggling to keep up with credit repayments, according to figures released with the report. Buy Now, Pay Later spending rose 16% in 2025, adding to signs that more consumers are using short-term borrowing and flexible payment tools in day-to-day budget management.

The report combined consumer sentiment research with aggregated, de-identified transaction and credit data from millions of active credit users. The consumer survey covered 934 Australians and examined attitudes to household finances, spending behaviour, credit use and confidence.

Spending shifts

Beyond cutbacks, the data points to a shift in where consumers are still willing to spend. Household spending lost momentum toward the end of last year as consumers became more cautious and shifted to lower-cost, home-based activities.

That trend showed up in subscription spending. Streaming subscriptions rose 8%, while digital subscriptions increased 17%, even as holiday spending softened.

The pattern suggests some households are replacing larger or less frequent discretionary purchases with lower-cost forms of entertainment that fit tighter weekly budgets. It also indicates that pressure on cash flow is reshaping spending choices rather than stopping consumption altogether.

For lenders and consumer-facing businesses, the data adds to evidence that customers' financial positions may be changing quickly. A drop in savings, heavier use of credit for essentials and delays to major purchases can all affect repayment patterns and demand across a range of sectors.

Barrett Hasseldine, Head of Data Science, Experian Australia & New Zealand, outlined the consumer response to rising costs.

"Consumers are becoming far more strategic in how they manage financial pressure. Rather than pulling back spending entirely, many households are reprioritising where money goes and using a mix of savings, spending choices and flexible payment options to manage cash flow. Credit is not a simple good or bad story. For many households, it can help smooth timing gaps and preserve flexibility. The important question for lenders and consumer-facing organisations is how to recognise when customer circumstances are changing, where pressure may be building and how repayment behaviour may shift. In this environment, a more current view of customer circumstances and portfolio health is critical, helping organisations identify emerging pressure earlier, engage customers with greater empathy and make more informed decisions as conditions change," said Hasseldine.