Borrow
Regulator cracks down on ‘problematic’ credit card debt
Borrowers unable to repay the maximum credit limit within three years will be denied credit cards under a proposal from the corporate regulator, aimed at addressing Australians’ battles with debt.
Regulator cracks down on ‘problematic’ credit card debt
Borrowers unable to repay the maximum credit limit within three years will be denied credit cards under a proposal from the corporate regulator, aimed at addressing Australians’ battles with debt.
The Australian Securities and Investments Commission (ASIC) has found that 18.5 per cent of Australian consumers are “struggling” with credit card debt, based on a review of 21.4 million accounts.
“Our findings confirm the risk that credit cards can cause financial difficulty for many Australian consumers”, ASIC deputy chair Peter Kell said, warning that consumers are being granted credit cards that don’t meet their needs.
Released this morning, the ASIC report Credit card lending in Australia concluded that credit cards can present a “debt trap” for Aussie consumers, with 550,000 people in arrears in June 2017. Additionally, 930,000 had persistent debt and 435,000 repeatedly repaid small amounts.
“Only a handful of credit providers take proactive steps to address persistent debt, low repayments or poorly suited products,” Mr Kell said.
“There are a number of failures by lenders to act in the interests of consumers and we expect them to respond swiftly to our findings. We will be following up to ensure the problems we have identified are addressed, including public updates later this year.”
ASIC also released a consultation paper calling for responsible lending assessments to consider the borrower’s ability to repay the credit limit within a three-year time frame.
The proposal, which is open for submissions until 31 July 2018, is based on the belief that a three-year period will protect consumers from entering into unsuitable contracts while still providing reasonable access.
According to the report, consumers are also being stung by balance transfers, with 30 per cent of those who switch during promotional periods actually increasing their debt by at least 10 per cent.
Additionally, in 2016-17 consumers paid $1.5 billion in annual fees, late payment fees and other usage fees. As of June 2017, $31.7 billion existed on credit cards and was accruing interest charges.
“ASIC expects credit providers to take proactive steps to address consumers with problematic credit card debt,” the regulator said.
Credit card
Credit card debt falls to lowest levels since 2004
Early access to superannuation, a lack of places to spend money and low consumer confidence has seen Australians pay off $6.3 billion in credit since the pandemic began, new research has revealed. ...Read more
Credit card
Is it time to check your credit score?
Australian consumers who are looking to get a loan are being urged to recheck their credit score, with financial hardships and changing income statements likely to have an impact on their overall abil...Read more
Credit card
CBA launches new no-interest credit card
As younger Australians continue to choose buy now, pay later services over debt-accruing products, Australia’s largest bank has launched a no-interest credit card. ...Read more
Credit card
Interest-free credit cards hit Australia
One of the big four banks will now offer the first-ever no-interest credit card targeted at younger Australians who are ditching credit for buy now, pay later services. ...Read more
Credit card
Personal and business credit cards: What’s the difference?
With more Australians taking on contract and gig work in the COVID-19 downturn, more people are likely to be tossing up whether or not to use a personal or a business credit card, so what’s the diff...Read more
Credit card
9 tips to stop the credit card debt cripple
With debt levels expected to rise in the coming months due to COVID-19-related financial pressures, one expert has offered up some handy tips to stop Australians from being inundated by crippling cred...Read more
Credit card
Aussies face debt crisis following COVID-19
The sharpest economic downturn since the Great Depression is seeing the number of Australians struggling to pay down their debt rise, new research has found. ...Read more
Credit card
Are you holding the right credit card?
Australians are relying on credit more than ever, but most have chosen the wrong card for their personal situation, new research has found. ...Read more
Credit card
Credit card debt falls to lowest levels since 2004
Early access to superannuation, a lack of places to spend money and low consumer confidence has seen Australians pay off $6.3 billion in credit since the pandemic began, new research has revealed. ...Read more
Credit card
Is it time to check your credit score?
Australian consumers who are looking to get a loan are being urged to recheck their credit score, with financial hardships and changing income statements likely to have an impact on their overall abil...Read more
Credit card
CBA launches new no-interest credit card
As younger Australians continue to choose buy now, pay later services over debt-accruing products, Australia’s largest bank has launched a no-interest credit card. ...Read more
Credit card
Interest-free credit cards hit Australia
One of the big four banks will now offer the first-ever no-interest credit card targeted at younger Australians who are ditching credit for buy now, pay later services. ...Read more
Credit card
Personal and business credit cards: What’s the difference?
With more Australians taking on contract and gig work in the COVID-19 downturn, more people are likely to be tossing up whether or not to use a personal or a business credit card, so what’s the diff...Read more
Credit card
9 tips to stop the credit card debt cripple
With debt levels expected to rise in the coming months due to COVID-19-related financial pressures, one expert has offered up some handy tips to stop Australians from being inundated by crippling cred...Read more
Credit card
Aussies face debt crisis following COVID-19
The sharpest economic downturn since the Great Depression is seeing the number of Australians struggling to pay down their debt rise, new research has found. ...Read more
Credit card
Are you holding the right credit card?
Australians are relying on credit more than ever, but most have chosen the wrong card for their personal situation, new research has found. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
