4th May 2012
Mates rates: Australians borrow $1.6 billion from nearest and dearest
According to a new study released by CommBank Kaching, the average Australian borrows more than $200 from their nearest and dearest every month, equating to over $1.6 billion[i]. This billion dollar exchange between friends, family and colleagues is being dubbed the, ‘Australian Informal Borrowing Network’ (AIBN).
Buddy can you spare a dime?
The biggest contributor to the AIBN is ‘unforseen or emergency situations’, with just under half (49 per cent) indicating this is their most common reason for borrowing. However, for others simply ‘running out of money before payday’ (26 per cent), ‘never having enough cash’ (24 per cent) or ‘convenience’ (22 per cent) provide the reasons behind their informal borrowing needs.
Interestingly, the study shows big differences in the value of informal borrowing networks between genders, age groups and locations[ii]:
• Women borrow almost twice as much as men ($9,830,000 Vs. $5,850,000).
• 18-24 year olds borrow $2,400,000 more than 30-39 year olds ($7,220,000 Vs. $4,850,000).
• Those living in capital cities borrow almost three times as much as those living in regional areas ($1.2 billion Vs. $3,460,000).
The Bank of Mum
When it comes to our preferred informal lenders, the ‘Bank of Mum’ firmly tops the list with the majority of Australians saying they would be most likely to ask their mum if they needed to borrow $50. Australian mums are also the most likely to be lending money on a regular basis with the average Australian asking to borrow money from their mum 1.72 times a year.
Australians increasing reliance on informal borrowing networks has led to an explosion in the uptake of mobile payment methods, including CommBank Kaching – a revolutionary new mobile payment app – which has seen more than 235,000 downloads in a matter of months. The new smartphone application allows consumers to make instant peer-to-peer payments removing the need for long-term informal loans.
“Our research shows that millions of Australians rely on informal borrowing networks for emergencies or short term loans. Recent innovations in smartphone banking, such as our Kaching application, mean Australians consumers can make instant payments to friends and family using their favourite communication channel,” said David Lindberg, Executive General Manager Cards, Payments and Retail Strategy.
“From paying a work colleague for a coffee via their email address, to splitting the cost of dinner with friends via a Facebook® friends payment, CommBank Kaching fuses peer-to-peer payments via text, email and Facebook to give Australians more ways to make safe, secure payments to their friends and family.” continued Mr Lindberg.
Getting into debt-iculty with mates
Although it seems Australians are more than happy to lend each other money, when it comes to repaying informal loans the study paints a slightly different picture.
Despite the majority (85 per cent) of Australians claiming that they were brought up to always repay their debts, almost half (49 per cent) have experienced disagreements when it comes to paying loans back and a surprising one in five (20 per cent) Australians have actually lost friends over lending and borrowing money.
However, many disagreements over informal loans may be down to simple human error and lack of access to social banking tools. While the majority (76 per cent) of Australians agree that they would ideally get their cash back instantly, more than half (52 per cent) admit that it’s difficult to pay people back if they do not have enough cash on them.
With nearly than two thirds (60 per cent) of Australians now wishing that there was a way to pay people back on the spot without relying on cash, applications such as CommBank Kaching, which enabling mobile payments via Near Field Communication (NFC), email, mobile and Facebook, and the ability to check and transfer money between accounts, look set to become increasingly popular.
“We all know that borrowing money from friends and family can be the cause of disagreements, whether that’s over the amount or best way to pay someone back. CommBank Kaching is a significant leap forward in how we pay and receive money from each other. It brings speed, convenience and importantly money to our informal borrowing networks, giving Commonwealth Bank customers more ways to instantly pay and receive money than any other bank,” said Mr Lindberg.
- The average Australian owes cash to 2 people.
- Over the last month, the average Australian has borrowed $213.58 from friends, family or colleagues. In total, Australians have borrowed $1.6 billion using this informal borrowing network.
- Amongst those who have borrowed money from other people, the most common reasons for borrowing money are unforeseen or emergency situations (49%).
- Whilst one in three (33%) Australians claim to know someone who has deliberately forgotten to pay them back the cash they owed, less than one in ten (9%) admit to having done this themselves.
- Similarly, while only 7% of Australians admit borrowing cash from someone when they already had some, 23% claim to know someone who has done this.
- If they needed to borrow $50, Australians would be most likely to ask their mum or their partner first. Overall, the majority of Australians would ask mum to borrow $50 before going to other people.
- Australian mums are not only the first port-of-call if you need to borrow $50, they are also the most likely to be lending money on a regular basis.
If consumers want to find out more about CommBank Kaching, or download the app, please visit: www.commbank.com.au/kaching
Who do you borrow money from?
[i] All monetary figures have been calculating using weighted data and the latest population estimates sourced from the Australian Bureau of Statistics
[ii] All monetary figures have been calculating using weighted data and the latest population estimates sourced from the Australian Bureau of Statistics